Canadian firms are dealing with a lot of uncertainty as they wait to see the impact of tariffs on Canadian steel and aluminum exports to the United States. For the moment, unless you’re a primary steel and aluminum supplier to the U.S., you likely won’t feel the immediate impact. 

Mostly, products manufactured in Canada won’t be affected. Here’s a primer to help you get your head around what the U.S.-imposed tariffs mean for Canada’s steel and aluminum industries and how your business may be affected.

U.S. implements new steel and aluminum tariffs

On May 31, the U.S. administration ended its months-long tariff exemption for Canada and Mexico, placing the same hefty tariffs on steel and some aluminum imported from its NAFTA partners that were already imposed on other trading nations in March. The new tariff measures took effect immediately on June 1, 2018.

Quick facts on Canadian steel and aluminum exports to the U.S. 

  • Canada is the largest supplier of steel to the U.S. market. 
  • In 2017, 95% of Canadian steel exports and 88% of our aluminum exports were sold to the U.S. 
  • Canadian aluminum producers supply 47% of all aluminum to the U.S. market.
  • Canadian steel and aluminum exports to the U.S. were valued at $16.6 billion in 2017.

American buyers will absorb costs

It’s still unknown precisely how the tariffs of 25% on steel products and 10% on some aluminum products will be managed by U.S. customs. Ultimately, however, the costs are expected to be offloaded to and absorbed by American buyers, mostly manufacturers. 

The U.S. Department of Commerce has outlined how U.S. companies – your potential customers - can apply for exemptions, if they feel what they’re importing from Canada has no impact on national security. U.S. buyers can also apply for an exemption if they can’t find an alternative domestic supplier. 

Canadian consumers, who purchase U.S.-manufactured goods made from Canadian materials, are expected to feel the price impact eventually. The same goes for Canadian firms who are part of the overall supply chain. 

For now, if you’re not a primary supplier of steel and aluminum, it should be business-as-usual in your dealings with your U.S. customers.

Canada’s primary suppliers most impacted

It’s Canada’s primary steel and aluminum producers, key suppliers to the U.S. manufacturing sector, that are most impacted by the steel and aluminum tariffs.

The U.S.-imposed steel tariffs apply mostly to materials used in manufacturing:

  • flat-rolled products of iron or non-alloy steel
  • hot-rolled bars and rods of iron or non-alloy steel 
  • stainless steel products

The list of more than 200 products affected by the tariffs is extensive, however, and also applies to semi-finished products of iron or non-alloy steel

Know your product classification number

If you’re unsure where your company fits into all this, it’s important to understand the Harmonized System (HS) Codes or Harmonized Tariff System (HTS) Codes associated with the products you’re selling to the U.S. The Government of Canada has a search tool to help you identify your product’s specific HS Code.

The 25% tariff on steel applies to the following HS codes:

  • 7206.10 through 7216.50
  • 7216.99 through 7301.10
  • 7302.10
  • 7302.40 through 7302.90
  • 7304.10 through 7306.90, including any subsequent revisions to these classifications

These codes cover steel produced by steel mills, including stainless steel.  Manufactured products that contain stainless steel are not included. If the product you’re selling to the U.S. doesn’t fall within the HS codes mentioned above, then it is not subject to the tariffs.

The 10% tariff on Canadian aluminum applies to the following HS Codes:

  • Unwrought aluminum (HS 7601)
  • Aluminum bars, rods, and profiles (HS 7604)
  • Aluminum wire (HS 7605)
  • Aluminum plate, sheet, strip, and foil --flat rolled products (HS 7606 and 7607)
  • Aluminum tubes and pipes and tube and pipe fitting (HS 7608 and 7609)
  • Aluminum castings and forgings (HS 7616.99.51.60 and 7616.99.51.70)