Canadian trade negotiators are back in Washington this week pushing a plan that would let a limited volume of Canadian steel and aluminum enter the United States at reduced tariffs, while anything above that quota would still face duties as high as 50 per cent. It’s a real shift from where Canada-U.S. metals trade stood as recently as 2019, and the gap between “no tariffs” and “quota-limited tariffs” is the part of this story that hasn’t gotten much attention yet.
What’s actually on the table
Under the proposal being discussed by Intergovernmental Affairs Minister Dominic LeBlanc and chief negotiator Janice Charette, steel shipments inside an agreed quota would face U.S. tariffs of roughly 10 to 15 per cent, while volumes above that ceiling would still be hit with the 25-to-50-per-cent range imposed under Section 232 of the Trade Expansion Act. That’s a discount from today’s rates, but it is not a return to tariff-free trade, and it would mean Canadian exporters agreeing, in effect, to cap how much metal they ship south in exchange for a lower rate on what fits inside the box.
Why this is a step back from 2019, not a step forward
It’s worth remembering what the last resolution of a Section 232 dispute with Canada actually looked like. When Washington first imposed 25 per cent steel and 10 per cent aluminum tariffs on Canada in mid-2018, Ottawa retaliated with C$16.6 billion in countermeasures on American goods. That standoff ended in May 2019 with a joint statement in which the United States agreed to eliminate all Section 232 tariffs on Canadian steel and aluminum outright, with no quota attached, restoring the tariff-free access Canada had expected under continental trade rules. A quota system, however generous, is a lower bar than what was already achieved once before. The open question this round is whether Ottawa is negotiating toward restoring that 2019 baseline, or settling for something structurally worse but easier to reach given the current 50 per cent tariffs now in place.
The regional stakes behind the numbers
The dollar figures explain why Ottawa is willing to negotiate at all. Canada exported roughly US$11.2 billion in aluminum and US$7.6 billion in iron and steel to the U.S. in 2024, according to trade data, and the two metals together have made up close to $35 billion in annual cross-border trade in recent years. Since the 50 per cent tariffs took hold, steel exports to the U.S. have fallen by roughly half. The Canadian Labour Congress has estimated 43,000 jobs are directly or indirectly at risk. The exposure is concentrated: Hamilton, Ontario, home to Stelco, accounts for an estimated 5,000 direct steel jobs, while Quebec’s Saguenay region, anchored by a major Rio Tinto aluminum operation, employs close to 3,000 people in the sector. StatCan figures show primary metal manufacturing output falling 7.1 per cent year-over-year as of the most recent reporting period, with aluminum processing down nearly 20 per cent. Those are the communities with the most riding on whether a quota is set high enough to reflect actual pre-tariff shipping volumes, or low enough to lock in today’s diminished trade.
What hasn’t been answered yet
Neither Ottawa nor Washington has disclosed what the actual quota volumes under discussion would be, and that number matters more than the headline tariff rate. A quota set near historical export levels would let most Canadian shipments back in at the lower rate. A quota set closer to current, tariff-suppressed volumes would effectively make the reduced tariff a reward for accepting a smaller U.S. market permanently. Given that steel exports have already fallen by half, negotiators on both sides have an incentive to anchor any quota to the post-tariff baseline rather than the pre-2025 one. That distinction, not the tariff percentage itself, is what will determine whether this deal is a genuine win for Hamilton and Saguenay workers or a formalized version of the shrunken trade relationship that already exists.
Via The Globe and Mail. Sourcing: corroborated via CBC News. 2018-19 Section 232 timeline via canada.ca joint statement (May 2019). Trade and jobs figures via Trading Economics, Statistics Canada and Canadian Labour Congress estimates.
