Canada unveils C$1.5 bln financing program to support US tariff-hit metals industry

Canada unveils C$1.5 billion support package

The new measures include the creation of a new C$1 billion Business Development Bank of Canada (BDC) program “that will strengthen Canada’s economic resilience” and will be available to industries that manufacture and export products containing steel, aluminium or copper, the Canadian government said on Tuesday.

The program is aimed at Canadian companies that use steel, aluminium or copper “in a significant way in their production” and have been hurt by US President Donald Trump’s proclamation on Saturday April 2 that alters the way Section 232 tariffs are calculated on derivative products.

Derivative articles substantially made of steel, aluminium or copper will pay a flat 25% duty on their full value, according to Trump’s proclamation in early April, a departure from the previous method of collecting 50% tariffs on only the metals component of a product imported into the US.

This decision sent ripples across North American steel supply chains, with many companies forced to recalibrate their business models overnight.

The Canadian government denounced the US tariffs as “unfair and unjustified,” and said it is “working with urgency to transform our strategic industries so they can adapt, compete and win in this new global environment,” according to Tuesday’s press statement.

The BDC program will provide financing at favorable terms to enable businesses to address immediate pressures. It will also offer the industry “a new tool to transform and adapt to future market conditions.”

“The government expects Canada’s financial institutions to continue to work with the businesses as we lean in collectively to support this sector,” the press statement said. “This new program aligns with the government’s priority to provide rapid liquidity to viable businesses facing significant economic challenges as a result of US steel, aluminium and copper tariffs.”

In addition, the Canadian government is providing an additional C$500 million through the Regional Tariff Response Initiative (RTRI) to support tariff-affected businesses.

Broader trade defense measures already in place

The Canadian government has implemented a raft of measures to protect the domestic steel industry after the imposition of 50% Section 232 tariffs in June 2025 disrupted the long-entrenched supply chains between the US and Canada.

These measures include:

• 25% tariffs on a list of US steel product imports worth C$12.6 billion and aluminium products worth C$3 billion;
• a commitment of C$5 billion, delivered through the Strategic Response Fund (SRF), with flexible terms to help firms in all sectors, including steel and aluminium, affected by tariffs to adapt, diversify and grow;
• tariff rate quotas (TRQs) to curb foreign steel imports, with TRQs set to 20% of 2024 import levels, with a 50% tariff applied above that threshold, for non-free trade agreement (FTA) countries and TRQs set at 75% of 2024 import levels, with the same over-quota tariff, for FTA partners (excluding the US and Mexico);
• a 25% tariff applied on certain steel and aluminium imports from China as well as on certain non-US steel and aluminium imports that contain steel that is melted and poured in China or aluminium that is smelted and cast in China;
• a 25% tariff applied on certain imports of steel-derivative products such as wind towers, prefabricated buildings, fasteners and wires;
• a new reskilling package for up to 50,000 workers, more flexibility and extended benefits in employment insurance and a new digital jobs and training platform to connect Canadian workers more quickly to careers;
• more than C$100 million earmarked over two years to provide support to eligible employers in sectors with an active work-sharing agreement and a commitment to supporting training for employees working reduced hours, helping up to 26,000 Canadian workers in various sectors, including steel;
• C$150 million of the RTRI carved out for steel producers;
• enhanced financing tools, including changes to the Large Enterprise Tariff Loan (LETL) and expanded support through the BDC Pivot to Grow Loan and the regional development agencies;
• use of Canadian steel and aluminium prioritized in publicly funded projects through the new Buy Canadian procurement policy that requires all contracts worth over C$25 million to prioritize Canadian materials;
• temporary freight rate relief for steel and lumber, to decrease domestic transportation costs and encourage consumption of Canadian-made products.

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Lukewarm reaction from Canadian industry

The announcement was met with a hefty dose of skepticism and, at best, cautious optimism by some Canadian steel industry participants.

“I saw that announcement, but there is no clarity on the process,” a market participant said. “It usually takes about a month to figure out what the new measures mean.”

A second source was trenchant in his criticism.

“So, instead of making actual transformative changes, we are going to rely on ministerial scolding to rescue Canadian manufacturers,” the second source said, referring to the government’s statement that it expects Canada’s financial institutions to “continue to work with the businesses as we lean in collectively to support this sector.”

The second source said there had been no measures in Canada to make the country “less hostile to business and more appealing for investment.”

“No big tax reform, no changes to the banking system, no opening up to competition in highly regulated areas, no changes to the investment climate,” the second source said. “The government talks about ‘bold’ solutions but has offered nothing but the same top-down ‘command and control’ solutions.”

The second source criticized that “Canada’s solution seems to be more government handouts in the form of direct subsidies or grants and more government-run funds that will pick winners and allocate capital instead of the private financial sector.”

“What we have in Canada is a failure by the anti-competitive banking system to take sufficient risk,” the second source said. “There is not enough banking competition and it is killing productivity.”

Banking reform discussion emerges

These comments came just before Peter Routledge, the superintendent of financial institutions at Canada’s Office of the Superintendent of Financial Institutions (OSFI), said in an interview with local media on Tuesday May 4 that OSFI was exploring avenues to “streamline” banking processes, aiming to balance maintaining the stability of Canada’s financial system and fostering a more competitive lending environment.

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