Canada doubles counter tariffs on U.S. steel to 50 starting September 8%

On August 25, the Canadian Ministry of Finance announced that the country would impose counter tariffs of 15, 25, and 50 percent on goods subject to U.S. tariffs under Sections 338 and 232. At the same time, the rate for each product will correspond to the American one. The measures will take effect on September 8, 2026 at 00:01 a.m. and will affect imports from the United States in the amount of 27.6 billion Canadian dollars. However, they will not apply to American goods that are already on their way to Canada.

Unlike Mexico, which negotiated separate provisions of the U.S.-Mexico-Canada Trade Agreement (USMCA) before the July 1, 2026 extension date, Canada joined them late. Since the three countries failed to extend the USMCA, and the agreement is now being reviewed year after year, President Trump invoked Section 338 of the Tariff Act of 1930 to impose an additional 50% tariff on certain Canadian goods, including products that comply with USMCA requirements. The three categories of goods that Canada was discriminated against were cars, dairy products, and alcoholic beverages.

Although on August 18, President Trump announced that a mutual trade deal had been reached with Canada, subject to finalizing documents, negotiations ceased a few days later, and additional duties under Section 338 entered into force. This section does not affect and it does not change the current duties on steel under Section 232. They could be supplemented, but duties under section 338 apply to products that are not subject to steel tariffs. As a result, Canada promised to introduce new tariffs "dollar for dollar" and did so for almost all items on which the United States imposed duties. As for steel, it raised the Canadian tariff on American steel from 25% to 50%.

The potential impact on the US steel industry can be judged by the results of previous measures. Canada is the second largest destination for U.S. steel exports after Mexico. In 2025, American factories shipped 2.55 million tons of steel to Canada, which is 28.1% less than 3.55 million tons in 2024, or almost 1 million tons less. This decrease was more than double the 12% drop in shipments to Mexico over the same period, and significantly outpaced the 19.3% drop in total U.S. steel exports to the world. Canada's share of U.S. steel exports decreased from 41.8% to 37.3%. Monthly volumes dropped sharply after the 25% counter-tariffs came into effect in Canada on March 13, 2025: from 260,155 tons in March to 165,308 tons in April, and they have not returned to the March level.

It can be expected that an increase to 50% from September 8 will lead to a further reduction in supply volumes.