Trump Strengthens Steel Tariffs as Canadian Layoffs Mount

U.S. President Donald Trump signed a proclamation strengthening the tariffs on imported steel, aluminum and copper on April 2, and the consequences for Canadian producers are now becoming visible in layoff notices and production cuts at plants across Ontario, Quebec and British Columbia. The proclamation maintained a flat 50 per cent duty on articles made entirely or almost entirely of steel, aluminum or copper, and tightened the application of a 25 per cent rate on so-called derivative articles that are substantially made of those metals.

For Canada, the 50 per cent rate is particularly punishing because exports to the United States account for the overwhelming majority of Canadian steel and aluminum production by volume. Unifor, the United Steelworkers and the Canadian Steel Producers Association have each reported significant early-stage layoffs in the weeks since the tariffs were introduced, and provincial governments in Ontario and Quebec have begun to coordinate bridging support programs.

Prime Minister Mark Carney, speaking in Ottawa on April 23, described the tariffs as irritants that are damaging Canadian industry without serving any legitimate U.S. economic interest. He said Canada will continue to negotiate in good faith but would not offer further concessions simply to secure talks, and signalled that retaliatory counter-tariffs already in place against American goods will remain and could be expanded if the situation continues to deteriorate.

What the proclamation changes

The April 2 proclamation does not introduce new tariffs but rather closes perceived loopholes in the existing regime. Articles that are fully or almost entirely made of steel, aluminum or copper pay a flat 50 per cent on their full value at entry. Derivative articles, meaning goods that contain but are not substantially composed of those metals, pay a 25 per cent duty on the value of the metal content within the good.

The White House positioned the proclamation as a national security measure, arguing that it is necessary to prevent circumvention of the original tariffs through creative product categorisation. In practice, the effect on Canadian producers is to ensure that virtually every steel and aluminum shipment destined for the United States is captured by the regime, closing options that some exporters had been using to mitigate the impact.

CUSMA exemptions have been narrowed as part of the proclamation, though some products continue to be protected by trilateral agreements originally negotiated under the Trump and Trudeau governments. The definition of what qualifies for these exemptions has become increasingly contested, and Canadian exporters have reported more frequent customs disputes and delayed shipments as Border Protection officers apply the new framework.

Layoffs at Canadian plants

Approximately 23,000 Canadians are employed directly in steel production and another 10,000 in aluminum production, and layoff notices have already started to arrive at plants in Hamilton, Sault Ste. Marie, Chicoutimi and Kitimat. Stelco, the Hamilton-based integrated steel producer, has announced temporary production halts at one of its main mills, and several smaller fabricators have told Unifor they are reviewing staffing.

Rio Tinto, one of the largest aluminum producers in Canada, has said that the tariffs are making its smelter in British Columbia uncompetitive in U.S. markets and has begun to pursue alternative buyers in Europe and Asia. The company has not announced specific layoffs but has said production schedules are under review. Alcoa, operator of several Quebec smelters, has announced staffing adjustments at its Deschambault plant.

The indirect employment effects are broader. Roughly 300,000 additional workers are employed in downstream metal fabrication, auto parts, construction materials and related industries that depend on steel and aluminum inputs. Many of these workers face slower but still significant risks as customers adjust production schedules and supply chains. Provincial governments have begun to coordinate with federal Employment Insurance programs to expedite benefit processing for affected workers.

Provincial government response

Ontario Premier Doug Ford has been among the most vocal provincial leaders on the tariffs. Ford told CNN's Wolf Blitzer on April 23 that the U.S. economy is losing out on tens of billions of dollars as Canadians boycott American goods, and has encouraged Ontarians to continue buying Canadian. His government has announced an expanded retraining and wage-subsidy program for tariff-affected workers in steel and auto parts.

Quebec Premier Christine Frechette has committed to similar measures for aluminum workers and communities. Frechette's government has coordinated with the federal Liberal government on a joint announcement expected in the coming weeks that will combine provincial and federal support. The aluminum sector is concentrated in the Saguenay and North Shore regions of Quebec, where the economic impact of extended tariffs would be particularly acute.

British Columbia Premier David Eby has announced a targeted support program for Kitimat-area workers and has urged the federal government to provide additional resources for communities in the province most exposed to U.S. tariffs. Eby has also supported Ottawa's refusal to offer further concessions, and has repeatedly made clear that the province stands behind the federal negotiating posture.

Industry perspective

The Canadian Steel Producers Association has described the current environment as the most challenging its members have faced in decades. The Association has called for a coordinated federal response including tax measures, accelerated depreciation allowances, additional retraining support and targeted procurement preferences for Canadian steel in federal infrastructure projects. The Association's president has warned that further layoffs are likely in the coming weeks if the tariffs remain in place.

The Aluminum Association of Canada has taken a similar position. The association has pointed to aluminum's role as a strategic input in the energy transition and has argued that continued U.S. tariffs on Canadian aluminum undermine the shared climate goals of both countries. The Association has also highlighted the low-carbon profile of Canadian hydro-powered smelters as a competitive advantage that U.S. buyers should value.

Downstream manufacturers have expressed mixed reactions. Automakers including the Canadian operations of General Motors, Ford and Stellantis have warned that higher metal input costs will ultimately be passed to consumers. Construction companies have raised similar concerns about the cost of building materials, and have asked both federal and provincial governments to consider offsetting measures for infrastructure projects already under contract.

Retaliation and counter-tariffs

Canada has maintained retaliatory counter-tariffs against a range of American consumer and industrial goods, and the Carney government has said these measures will remain in place. The counter-tariff list includes American bourbon, orange juice, dairy products, household appliances and certain agricultural goods, targeted in part because of their political visibility in key U.S. electoral states.

Finance Minister Francois-Philippe Champagne has said that Canada is prepared to expand the counter-tariff list if the U.S. administration further escalates. Options under active consideration include additional consumer goods, specific industrial inputs and selected services, though the specific contents of any expanded list have not been made public. Champagne has cautioned that counter-tariffs are a last resort and that the government's preferred approach is a negotiated resolution.

The Canadian consumer response has also become an important element of the trade dispute. Surveys have shown significant Canadian reduction in purchases of American goods, travel to the United States and use of American services, all of which have economic consequences for U.S. suppliers. Premier Ford's recent public comments have explicitly credited Canadian consumer activism as a factor in U.S. business pressure on the Trump administration.

CUSMA review ahead

The tariff dispute is the immediate context for the scheduled July 2026 review of the Canada-United States-Mexico Agreement. The review will either extend the treaty, amend it, or potentially open the path to its termination under the sunset provisions negotiated by the original signatories. Canadian officials have privately said they expect a difficult and potentially prolonged renegotiation.

The Carney government has established a new Advisory Committee on Canada-U.S. Economic Relations to prepare its negotiating position, with the first meeting scheduled for April 27. The committee includes representatives from steel, aluminum, auto manufacturing, forestry, agriculture, financial services and organised labour, and is chaired by a former senior federal trade negotiator reporting directly to the prime minister.

The Mexican government has also been in close communication with Canada on the CUSMA review. Mexico has its own disputes with the United States over tariffs, migration and security cooperation, and has signalled interest in coordinating negotiating positions with Canada where possible. The three-country dimension of CUSMA, and the complicated dynamics of the bilateral U.S.-Mexico relationship, will shape any eventual outcome.

What's next

Carney's advisory committee meets on April 27 in Ottawa, with its first priority being to align business and labour voices around the federal negotiating position. The formal CUSMA review is expected to open in July, though preliminary technical discussions between trade officials have already begun. The Bank of Canada's April 29 monetary policy report is expected to include an updated assessment of tariff-related impacts on growth and inflation.

Canadian industry will be watching for any signal of a negotiated path through the immediate crisis. Short of that, affected workers and communities will depend on provincial and federal support programs to bridge the transition period. The scope and speed of those programs, and the ability of affected workers to retrain or relocate, will be important measures of policy effectiveness in the coming months.

For the broader public, the tariff dispute is already reshaping attitudes toward the United States. Polling has shown a significant shift in Canadian sentiment, with increased interest in diversification of trade relationships and in domestic industrial capacity. Whether these attitudes produce durable policy changes, or fade once a new equilibrium is reached with the United States, will be one of the defining political questions of the Carney government's mandate.