One year later—Assessing the impact of US trade restrictions on Canadian industries

Sector‑specific trade restrictions are adversely affecting the Canadian economy. Steel and lumber exports have declined significantly, while others have held up better in comparison. Overall, declines in exports have been less severe than expected, reflecting both business adaptability and government policy actions.

Several Canadian industries have seen steep increases in US tariffs over the past 12 months. Overall, industries facing sectoral tariffs account for about 1% of Canadian output and employment and roughly 15% of Canada’s exports.1 The latest data show that exports in the aluminum, steel, lumber and motor vehicle sectors have declined since tariffs were implemented (Chart 26).

The steel industry has been hit hard

Most Canadian exports of steel to the United States face a steep tariff of 50%, while derivatives made of steel products are subject to a 25% tariff. As a result, steel exports have fallen by half. Production and employment have also declined, but not by as much. This is partly because government measures—such as the Buy Canadian Policy, counter‑tariffs on the United States and tighter import quotas—are helping support domestic production. Consequently, inventory data show little evidence of widespread stockpiling. Industry consultations, however, point to a risk of further declines in exports as some contracts expire in 2026.

Softwood lumber exports continue to decline

Canadian lumber production has been on a multi‑year downward trend, partly caused by long‑lasting trade disputes that predate recent tariffs. US tariffs on the industry increased in October 2025. By February 2026, lumber exports were roughly 20% below 2024 averages. Employment levels in the industry continue to decrease roughly in line with the fall in production levels. Inventories are steady, suggesting no evidence of widespread stockpiling that could lead to the need for future production cuts.

After a sharp decline, aluminum exports have picked up

Canadian aluminum producers currently face a 50% tariff on sales to the United States—their main export market. In addition, derivatives made substantially of aluminum face a 25% tariff. Exports fell sharply after tariffs were introduced, and by July 2025 they were 50% below 2024 levels. Producers adapted by redirecting sales to Europe but at lower profit margins. After aluminum inventories in the United States were depleted, Canadian exports rebounded, regaining over half of their initial losses.

Results from industry consultations suggest that demand for Canadian aluminum will pick up further due to disruptions to production in the Middle East. Consultations also suggest that employment in aluminum production and processing has remained resilient. However, some layoffs have been observed among manufacturing firms further down the value chain, which are facing higher input costs for aluminum.

Copper exports have surged

In contrast, copper exports to the United States are 40% above their 2024 average. Despite facing a 50% tariff on certain types of products, producers have adapted by instead increasing exports of products that are not tariffed.

Endnotes