Stronger steel import surtax and quotas

Summary#

The government has changed the earlier steel import surtax rules through the Order Amending the Order Imposing a Surtax on the Importation of Certain Steel Goods (SOR/2025-155). The change tightens import quota levels and applies a 50% surtax on steel imports that exceed those new limits, starting August 1, 2025.

What it does#

• Tightens quota limits for tariff-free steel imports:
  • For countries without a free-trade agreement, tariff-free quotas are cut to 50% of 2024 volumes. Imports above that face a 50% surtax.
  • For countries with a free-trade agreement (except the United States and Mexico under CUSMA), a new quota is set at 100% of 2024 volumes; imports above that also face a 50% surtax.
• Expands the list of countries covered by the tariff-rate quota (TRQ) rules to include many FTA partners (excluding the U.S. and Mexico).
• Breaks the covered steel products into 23 more specific product subcategories (instead of the earlier five broad groups). This is to make quotas more targeted by product type.
• Adds a short transitional period and prorated limits for the first partial quarter from August 1, 2025 to September 25, 2025.
• Requires shipment-specific import permits (issued by Global Affairs Canada) for imports to be exempt from the surtax. Permit fees can be up to $31 per permit.
• Says that if a steel good is subject to this surtax, no other surtax under the Customs Tariff will apply on top of it (so the surtax they set is the only surtax applied).
• The order takes effect on August 1, 2025 and (according to the government statement) is expected to be repealed on June 27, 2026 unless extended or changed.

Who's affected#

• Importers of steel products into Canada. They may need to apply for shipment-specific permits to avoid the surtax.
• Domestic steel producers, who the government says these measures are meant to protect.
• Downstream manufacturers and construction businesses that buy steel. They could face higher input costs or tighter supplies if imports are reduced.
• Small businesses that import steel — the government notes they may face added administrative burden and possible higher costs.
• The federal departments that administer the rules: Global Affairs Canada (permits) and the Canada Border Services Agency (collecting the surtax).
• Countries that export steel to Canada — especially those without FTAs and FTA partners now included in the TRQ (the order lists specific countries in its Schedule 3).

Why it matters#

• Cost and supply: Importers who bring in steel beyond the new quota limits will face a steep 50% surtax. That can raise prices for businesses that use steel and for projects that rely on imported steel.
• Protection for the Canadian steel industry: The government says the measure aims to stop “trade diversion” — where steel is rerouted into Canada after restrictions elsewhere — and to stabilize domestic production and jobs.
• Administrative change: Importers now have to manage permit applications and possibly new IT or customs processes. The government estimates up to 53,000 permits could be issued in a year, with permit fees totaling about $1.6 million, and it estimates a potential incremental surtax exposure of around $711 million under one scenario.
• Short-term and subject to review: The measure starts August 1, 2025 and is being reviewed as market conditions evolve. The government says it may adjust, extend, or end the measure depending on how things develop.

If you import steel or rely on it for your business, watch for permit rules from Global Affairs Canada and collection notices from the Canada Border Services Agency ahead of August 1, 2025.