Americans to also bear brunt of tariffs on Canada steel and aluminum

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Canada tops the list of all the countries that import steel and aluminum into the United States, however the challenges posed by a new 25 per cent tariff regime from the Donald Trump administration will adversely affect our southern neighbour too, experts say.

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Retaliatory tariffs are expected from the bulk of America’s trading partners, including Canada. Mexico and the European Union have vowed the new U.S. tariffs “will not go unanswered.” 

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Where does Canada figure within U.S. imports of steel and aluminum?

When it comes to steel, Canada accounted for about 23 per cent of U.S. steel imports in 2024, according to global data and business intelligence platform, Statista. Brazil contributed around 15 per cent of U.S. steel imports, making it the second-largest supplier. Mexico provided about 12 per cent of U.S. steel imports.

However, there are other notable suppliers, according to the American Iron and Steel Institute, including South Korea, Vietnam, Japan, Germany, Taiwan, the Netherlands, China, Romania, Turkey, the UAE, Italy and Spain.

American steel imports were up 2.4 per cent overall in 2024, says the AISI.

With aluminum, Canada dominated as the largest supplier of aluminum to the U.S., providing nearly 60 per cent of American imports in 2024. The United Arab Emirates was a distant second followed by the UAE, China, South Korea and Bahrain.

How has the Canadian-American steel and aluminum trade relationship evolved in recent years?

The steel and aluminum trade relationship between the U.S. and Canada has been marked by tension as well as cooperation since 2018.

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Prior to the first Trump administration, the U.S. and Canada had a relatively stable trade relationship in steel and aluminum, with Canada being a major supplier to the U.S. But in March 2018, the U.S. imposed tariffs of 25 per cent on steel and 10 per cent on aluminum under Section 232 of the Trade Expansion Act, citing national security concerns.

Canada retaliated with tariffs on U.S. goods worth approximately $16.6 billion, including products like orange juice and whiskey. The tariffs led to increased costs for U.S. manufacturers and job losses. Canadian steel exports to the U.S. decreased by 37.8 per cent in June 2018, and aluminum exports dropped on average per month by 18.6 per cent compared to 2017.

Then, in May 2019, the U.S. lifted the steel and aluminum tariffs on Canada and Mexico as part of the negotiations of the United States-Mexico-Canada Agreement. After that, Canadian exports of steel products to the U.S. grew by almost 16 per cent, and aluminum exports also increased.

In a Feb. 12, 2025 client alert from U.S. law firm Holland and Knight, concern was expressed about the potential impact of a possible new trade clash. It stated that “numerous foreign trading partners…have threatened retaliation against President Trump’s planned (25 per cent) tariffs on all steel and aluminum imports, potentially reviving a…trade war unless a deal can be brokered over the next month.”

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The firm is advising U.S. clients to “take immediate steps to determine whether and to what extent their business operations will be impacted by these tariffs or the retaliatory tariffs likely to be imposed on U.S. exports.”

The recent U.S. move is expected to increase costs for U.S. manufacturers, disrupt supply chains, and potentially lead to retaliatory measures from Canada, confirms RBC in a recent report.

How will the new tariff regime affect Americans?

The intention of tariffs is to protect domestic steel and aluminum producers by making imports more expensive, leading to (at least) a short-term increase in domestic production. For example, previous tariffs increased U.S. steel production by 1.9 per cent and aluminum by 3.6 per cent.

However, as with tariffs on most products, they will raise the cost of importing steel and aluminum, which can lead to higher production costs for U.S. manufacturers that rely on these metals, reports the New York Times.

New tariffs could “result in increased prices for final products, affecting (American) consumers and downstream industries, which are then passed on to consumers through increased costs for goods like cars, appliances, and construction materials,” according to the Washington-based National Foreign Trade Council. Several American industries are affected by price fluctuations in steel and aluminum, including the automotive sector, construction industry, aerospace, household appliance makers and the energy industry.

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So, while tariffs may save or create jobs in the steel and aluminum sectors, they can also lead to job losses in downstream industries due to higher costs. Moreover, estimates from the Peterson Institute for International Economics in Washington suggest that each job saved in the U.S. steel industry will come at a cost of about US$650,000 to consumers.

What’s next for Canada?

If the experience of the 2018-19 tariff hikes can be taken as a guide, “much of the cost will be paid by U.S. purchasers of tariffed products, limiting the negative impact on U.S. trade partners, including Canada,” says RBC.

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