OTTAWA — The federal government is preparing a sweeping new support package for Canada’s lumber and steel industries, sectors that have been hit hard by escalating U.S. tariffs and weakening global demand. According to a senior government official with knowledge of the plan, Prime Minister Mark Carney will announce the measures later this afternoon.
The package includes $500 million in federal loan guarantees aimed at stabilizing the softwood lumber sector, which has endured decades of recurring trade disputes with Washington. The Toronto Star first reported details of the upcoming measures.
Steel import limits tightened
According to the official, Ottawa will also impose new limits on foreign steel imports, reducing import quotas from countries without free-trade agreements to 20% of 2024 levels, down from the 50% cap introduced in July. The government estimates this will free up approximately $854 million in domestic market demand for Canadian steel producers.
Imports from free-trade partners — except the United States — are also expected to be reduced further, although exact thresholds have not yet been finalized. In July, Canada applied a 50% surtax on any steel imported above 2024 levels from FTA countries.
Industry analysts note that these new restrictions mirror safeguards used by the European Union earlier in 2025, when Brussels tightened steel import quotas to counter a surge of redirected Chinese and Turkish steel following U.S. tariff escalations.
Freight rate relief with CN Rail
The federal government is also negotiating with CN Rail to cut interprovincial freight rates for steel and lumber shipments by 50%, a move meant to lower transportation costs in a sector highly sensitive to logistics expenses. If CN is unable to reduce rates, Ottawa will provide subsidies to cover the difference.
It remains unclear whether similar freight supports will apply to shipments destined for northern regions, where construction materials often rely on seasonal sealift operations into Nunavut or long-distance trucking into the Northwest Territories and Yukon.
Tariffs continue to squeeze Canadian producers
Canada’s steel sector has been reeling since U.S. President Donald Trump reinstated 50% tariffs on Canadian steel in June — a move widely condemned by industry groups and U.S. construction associations that rely on Canadian materials. According to the American Iron and Steel Institute, steel prices in several U.S. regions rose between 8% and 14% this fall due to tightened supply.
The softwood lumber industry faces similar pressures. Duties on Canadian lumber have been a persistent feature of the bilateral trade relationship for nearly 40 years, and in October the U.S. raised its tariff rate on most Canadian producers to 45%. The increase has led to renewed mill curtailments in British Columbia and Ontario, with the Forest Products Association of Canada estimating more than 3,000 jobs lost since midsummer.
Global markets have compounded the struggle: the World Bank noted in its October commodity outlook that lumber prices have fallen 18% year-over-year, driven by a slowdown in U.S. housing starts and weaker Chinese demand.
Political tensions rise
Trade relations between Ottawa and Washington worsened further after Trump abruptly ended bilateral talks last month. His decision followed an Ontario government advertising campaign in U.S. markets that used archival comments from Ronald Reagan criticizing protectionism. The White House described the ads as “provocative” and “unhelpful to ongoing negotiations.”
With no sign of talks resuming and the tariffs continuing to bite, federal officials say the new measures are designed to protect strategic Canadian industries until the political climate improves.
