Canada Unveils New Supports for Lumber and Steel Sectors Hit by U.S. Tariffs

Canada is rolling out a major support plan for its lumber and steel industries after the United States imposed steep tariffs that disrupted two of the country’s most important export sectors. Prime Minister Mark Carney announced a wide set of measures intended to protect workers, stabilize companies, and help the industries shift toward a future that relies less on the American market.

The U S decision to apply a 50 percent tariff on Canadian steel and a 45 percent tariff on softwood lumber sent a shock through both industries. These sectors have long depended on access to American buyers, and the move instantly put thousands of jobs and billions of dollars in trade at risk. Carney said the situation exposed how vulnerable Canada had become after decades of depending on a single trading partner for most of its exports.

Last year, more than three-quarters of Canadian exports went to the United States, and nearly all of the country’s steel, aluminum, and lumber shipments crossed that border. Carney argued that this level of dependence is no longer realistic and said the time has come for Canada to build stronger internal demand and diversify its trade.

To help the industries adjust, the government announced several major steps. Import quotas will be tightened to give Canadian steel producers more room to compete at home. Countries without trade agreements with Canada will see their steel import quota reduced from half of the previous year’s levels to one-fifth. Countries with agreements, other than the United States and Mexico, will receive a smaller adjustment but will still face limits. The government is also introducing a 25 percent tariff on finished products made from foreign steel, such as prefabricated buildings, metal furniture, and wind towers. This change is meant to encourage buyers to choose products made with Canadian steel.

The lumber industry will receive 500 million dollars in loan guarantees to help companies maintain cash flow during the transition. In addition, the government plans to cut the cost of moving steel and lumber within Canada by working with rail companies to reduce freight rates for interprovincial shipments by half. The goal is to make it easier for Canadian producers to reach markets across the country instead of relying almost entirely on American demand.

Workers are also a focus of the plan. Funding will be available for retraining, skills upgrading, and income support for employees in work-sharing programs. Construction companies will receive incentives to use Canadian steel and lumber in new projects. The government hopes this will generate more domestic demand and give producers a stable base of customers.

Reactions from industry leaders have been mixed but largely supportive. Many steel producers say the plan gives them breathing room and helps level the playing field. Some warn that diversification will take time, because replacing the scale of the American market is not simple. Lumber companies say the loan guarantees are useful, but many still want a long-term resolution to the ongoing lumber disputes that have resurfaced for decades.

Economists note that the plan signals a major shift in Canada’s trade strategy. For years, the advice has been to diversify exports, but little changed because the American market was simply too convenient. With that door now partially closed, economists believe Canada may finally make serious investments in building stronger internal supply chains and expanding trade with Europe and Asia. Some analysts also say the new policies could help spark investments in modernization, automation, and clean production technologies that make Canadian steel and lumber more competitive.

There are concerns as well. Some trade experts warn that reducing reliance on the United States will not happen overnight. They say that industries tied so closely to the American market may face short-term pain before new markets take shape. Others caution that the American tariffs may change again after political shifts, which puts Canadian companies in an unpredictable position.

Despite the uncertainty, Carney stressed that Canada remains open to talks with the United States and is ready to restart negotiations whenever the American government is willing. For now, he says the priority is protecting Canadian workers and ensuring that these industries can stand on their own instead of depending on a single customer.