Tax Insights: US tariffs on steel, aluminum and copper imports from Canada

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Issue 2026-17

In brief

What happened?

On April 2, 2026, US President Donald Trump signed a proclamation¹ under section 232 of the US Trade Expansion Act of 1962 to strengthen existing tariffs on steel and aluminum imports into the United States and expand the scope of these measures to include copper articles and derivatives for the first time. Effective April 6, 2026, the proclamation establishes a revised tariff structure that:²

• generally applies 50% tariffs to core metal articles made entirely or almost entirely of aluminum, steel or copper, while reducing the tariff rate for certain derivative goods to 25%
• sets new standards for tariff calculations, including a shift to applying tariffs on the full value of the imported goods, rather than limiting the duty to the value of the metal content, and
• introduces a de minimis threshold that exempts imported goods containing 15% or less of the subject metals from section 232 tariffs

These developments build on prior proclamations, which are discussed in our previously released Tax Insights.³

Why is it relevant?

The April 2, 2026 proclamation significantly increases the cost of importing affected goods into the United States and introduces complex, variable tariff outcomes that depend on product classification, origin and participation in government programs (e.g. trade agreements, reduced rate categories). The inclusion of copper under section 232 for the first time represents a material expansion that will affect a broad range of Canadian industries, including mining, electrical equipment manufacturing, construction and infrastructure.

For metals importers, the shift to applying tariffs on the full imported value of goods, rather than only the metal content, can fundamentally change the tariff exposure for derivative products. The proclamation includes a reduced list of covered derivative products, but the revised tariff calculation approach means that the remaining derivative products could face significantly higher tariffs than under the prior section 232 regime.

Actions to consider

Canadian exporters of goods to the United States that are subject to both the aluminum, steel and/or copper tariffs and other tariffs imposed under section 232 will have to carefully consider the "stacking" order of operations and determine the optimal application of these tariffs on each of their goods to minimize the amount of tariffs on each good imported into the United States. This includes considering whether it remains beneficial to continue relying on the Canada-United States-Mexico Agreement (CUSMA) to be exempt from some of these tariffs.

In detail

Background

The April 2, 2026 proclamation establishes the following tariff structure:⁴

Key changes from prior tariff measures

The April 2, 2026 proclamation contains several notable changes compared to the prior section 232 regime:

• Expansion to copper – The inclusion of copper articles and derivative products within the scope of section 232 tariffs is the most significant change — it had previously been limited to steel and aluminum. The change reflects the US Administration’s continued concerns regarding global excess capacity, import penetration and the long-term viability of domestic metals production.
• Revised tariff calculation methodology –Tariffs will now apply on the full value of the imported goods for derivative products — instead of only on the steel or aluminum content of the article. This could result in materially higher tariff costs for importers.
• New de minimis threshold – Products containing 15% or less steel, aluminum or copper will no longer be subject to section 232 tariffs. This exemption was not previously available and may provide some relief for importers of goods with low metal content.
• Refined derivative product list – The proclamation includes a reduced list of covered derivative products, as compared to the previous section 232 regime; however, any resulting benefit could be offset by the revised tariff calculation methodology described above.
• Classification and reporting requirements – The proclamation refines classification and reporting expectations, which signals increased scrutiny around product scope, metal content and origin determinations. US Customs and Border Protection has clarified previously ambiguous reporting requirements and methodologies and now expects full compliance under these streamlined rules.

Interaction with other US tariffs

The "stacking" order of operations remains an important consideration for Canadian exporters. Canadian businesses should carefully evaluate the interaction of these tariffs with CUSMA. While the April 2, 2026 proclamation does not change the formal “stacking” order, it significantly alters the practical outcome of certain planning decisions.

In particular, the proclamation narrows the circumstances in which forgoing CUSMA protection yields a tariff advantage for aluminum‑containing derivative products. Most aluminum derivative articles are now subject to a 25% section 232 tariff applied to the full value of the product, aligning both the rate and tax base with the automotive tariff. As a result, for many derivative automotive parts, the decision to claim CUSMA may be tariff‑neutral, eliminating a strategy that was previously used to manage tariff exposure. This outcome does not apply uniformly. Core aluminum articles remain subject to a 50% tariff on their full value, and in those cases, accepting a 25% automotive tariff may still materially reduce total tariffs. In addition, the introduction of a de minimis exclusion for products containing 15% or less aluminum by weight fully removes those goods from section 232 tariffs, making preferential tariff treatment — such as a CUSMA claim — clearly beneficial where available.

Given these distinctions, Canadian exporters should avoid broad assumptions and, instead, assess tariff exposure on a product‑by‑product basis, taking into account classification, metal content, and how section 232 tariffs interact with other applicable US tariffs.

What businesses need to know and take action on

Companies should assess whether their products fall within the relevant Harmonized Tariff Schedule (HTS) classifications and annexes, and determine applicable tariff rates based on origin, product type and eligibility for reduced-rate programs. Metals exporters should review bill-of-materials and production engineering options to identify opportunities for lower-tariff treatment, including whether the new de minimis threshold may apply to certain products.

Primary producers of Canadian steel, aluminum and copper 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.

For Canadian companies procuring goods or components from the United States that contain material amounts of steel, aluminum or copper, those goods or components are likely to have significant price increases to reflect the impact of US tariffs (i.e. US tariffs increase pricing on imported metals, while pricing on US‑produced metals also generally increase due to reduced competitive pressure from foreign suppliers). 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 should also consider modelling the financial and tax impact, including customs value, intercompany pricing and contract terms, and consider supply chain restructuring where appropriate. These developments could drive companies to reevaluate sourcing, supplier diversification, and potential nearshoring or domestic production strategies, while also requiring closer alignment between customs, tax and transfer pricing functions. Immediate attention should be given to import timing, existing inventory and contractual tariff allocation, given the April 6, 2026 effective date.

The takeaway

Canadian businesses that export steel, aluminum or copper products — or goods containing these metals — to the United States should gain an understanding of these new measures to determine how they will affect their operations, pricing, supply chains and compliance obligations.

This revised section 232 tariff regime is likely to have broad cross-industry implications, particularly because the inclusion of derivative products extends tariff exposure beyond primary metals into manufacturing, construction, automotive and consumer goods sectors. Multinational companies could see downstream impacts on customs valuation, transfer pricing, supply chain design and effective tax rates.

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. See our Tariffs and Trade Policy Resource Centre for information to help your business assess and manage these tariffs.