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In brief

What happened?

On February 10 and 11, 2025, US President Donald Trump signed two executive orders¹ that will impose, starting March 12, 2025, a 25% tariff on imports of steel and aluminum products from all countries, including Canada.

The orders are issued under section 232 of the US Trade Expansion Act of 1962 and cite reasons relating to “national security” to protect and revitalize the US domestic steel and aluminum industries to achieve “sustainable capacity utilization of at least 80%.”

Why is it relevant?

The US tariffs will affect consumers and many businesses, because steel and aluminum are key components of products in many industries, from consumer goods (e.g. cars, appliances, cans for food and beverages) to large infrastructure projects. They will increase costs and disrupt supply chains (e.g. the automotive manufacturing sector is highly integrated across North America) and reduce profit margins.

Starting March 12, 2025, imports of Canadian steel and aluminum products into the United States could face tariffs that exceed 25%, if the proposed 25% tariff on imported goods under the US International Emergency Economic Powers Act (IEEPA) is also implemented.² Due to two distinct legal pathways, Canadian steel and aluminum imports could be subject to a combined 50% tariff (i.e. a 25% tariff under the IEEPA and the additional 25% tariff under section 232 of the Trade Expansion Act of 1962.)

Actions to consider

Primary producers of Canadian steel and aluminum should evaluate their sales channels to assess alternative markets where product sales would not face tariffs. To mitigate the impact of these tariffs, Canadian producers could also engage with their supply chain to negotiate lower raw material input costs and consider selling existing primary metal inventories to US clients before the tariffs are implemented. Staying informed of ongoing developments, including potential government incentives that could help the affected industries, and engaging in industry advocacy efforts can also be beneficial.

In detail

US tariffs on steel and aluminum imports

The executive orders signed on February 10 and 11, 2025 revise previous executive orders that had imposed, starting in March 2018, a 25% tariff on imports of steel products and a 10% tariff on imports of aluminum products. However, the previous executive orders had provided exemptions to certain countries (e.g. Canada had an exemption until May 31, 2018, and then from May 20, 2019 onwards).

Key provisions in the February 10 and 11, 2025 executive orders include:

• effective 12:01 am ET March 12, 2025, all imports of steel and aluminum products into the United States will be subject to a 25% tariff (in certain cases, the rate is higher for some countries); countries will no longer be eligible for exemptions from these tariffs
• all imports of derivative steel and aluminum articles specified in the annex to the orders (or any subsequent annex) will also be subject to an additional 25% tariff; with respect to these derivative articles:
  • for certain specified derivative articles, the tariff will apply only to the steel or aluminum content of the article
  • the tariff does not apply for derivative articles that meet minimum US-produced steel or aluminum content requirements (i.e. made from steel “melted and poured” in the United States) if certification is provided to and accepted by the US Customs and Border Protection (CBP) that the requirements have been met
  • a process for including additional derivative steel and aluminum articles will be established, and domestic producers or industry associations will be able to request for additional derivative steel and aluminum articles to be subject to these tariffs
• importers will no longer be able to obtain relief from these tariffs, and any previously granted relief for:
  • product exclusions, will remain effective until the earlier of their expiration date or the excluded product volume is imported
  • general approved exclusions, will be terminated as of March 12, 2025
• the US CBP is directed to prioritize its efforts to stop tariff misclassifications and duty evasion schemes of imported steel and aluminum articles and derivative steel and aluminum articles that result in non-payment of the 25% tariff; the CBP will assess the maximum penalty permitted by law and will not consider any evidence of mitigating factors in its determination
• no drawback will be available with respect to these tariffs

The takeaway

These tariffs will have a significant negative impact on Canada’s steel and aluminum industries, which export a considerable amount of their products to the United States. The impact would be even more devastating if the tariffs were 50% (as discussed above), instead of 25%. As mentioned above, Canadian steel and aluminum primary producers should evaluate their sales channels to assess alternative markets and engage with their supply chain to negotiate lower raw material input costs.

For Canadian companies procuring goods or components from the United States that contain material amounts of steel or aluminum, those goods or components are likely to have significant price increases to reflect the impact of US tariffs. These businesses should evaluate their supply chain options to understand the full impact of the tariffs on their input costs and identify alternative suppliers of goods or components from non-tariff countries. It is imperative to implement cost and cash management strategies, such as negotiating better terms with existing suppliers or finding efficiencies in their production or administrative processes. Businesses will need to adjust pricing strategies to reflect the increased costs, but still keep prices competitive, and seek cash flow mitigation strategies to manage a potential margin shortfall. In addition, importers of US steel and aluminum goods or components could consider increasing inventory levels of steel and aluminium products before the tariffs take effect to avoid immediate cost impacts.

We expect that Canada will announce measures to counter these US tariffs (e.g. imposing a Canadian surtax on certain US-origin imports). PwC can help your business navigate this current tariff situation. See our:

• Tax Insights “US tariffs and Canadian countermeasures: How will it affect Canadian businesses?” for strategies that can help Canadian businesses adapt to these and any potential new tariffs
• Tariffs, Trade and Policy Resource Centre for information to help your business assess and manage these tariffs

<sup>1. Executive Orders “Adjusting Imports of Steel into The United States” (February 10, 2025) and “Adjusting Imports of Aluminum into The United States” (February 11, 2025).
2. For more information on the IEEPA tariffs that were implemented on March 4, 2025, see our Tax Insights “US tariffs and Canadian countermeasures: How will it affect Canadian businesses?.”</sup>