1. This note provides information on the countermeasures introduced by the Government of Canada on July 1 in response to U.S. tariffs on Canadian steel and aluminum products. It is based on information that has become available since the staff report (SM/18/170) was issued and does not alter the staff appraisal.
2. On May 31, 2018, the U.S. announced the imposition of tariffs on imports of certain steel and aluminum products from Canada (at the rates of 25% and 10%, respectively). The duties were applied by the U.S. following an investigation into the national security implications of aluminum and steel imports under section 232 of the Trade Expansion Act of 1962. Canada accounts for some 15 percent of U.S. steel imports and almost 40 percent of aluminum imports but steel and aluminum products represent less than 2 percent of Canadian exports and imports.
3. In response, Canada introduced surtaxes on C$16.6 billion of imports of steel, aluminum, and 79 consumer products from the U.S, which the Canadian authorities indicate is equivalent to the value of 2017 Canadian exports affected by the U.S. tariffs. Steel products are subject to a 25 percent surtax. Aluminum and other products are subject to a 10 percent surtax.
4. In addition, the Government of Canada will make available up to C$2 billion to support the steel, aluminum, and manufacturing industries. The measures will include: (i) extending the duration of work-sharing agreements to help employers retain their skilled workforce and avoid layoffs during challenging times; (ii) increasing funding to the provinces and territories to increase the capacity of current job and training programs available to workers affected by the U.S. measures; (iii) providing liquidity support to affected businesses; and (iv) offering up to $250 million in new support through the Strategic Innovation Fund to help bolster the competitiveness of Canadian manufacturers and better integrate the steel and aluminum supply chain within Canada.