UNDERSTANDING STEEL TARIFFS IN CANADA: IMPACTS ON IMPORTING, PRICING, AND COMPLIANCE

Editor's Note (March 20, 2025): This article has been updated to clarify terminology regarding Country of Manufacture (COM) and Country of Melt. We appreciate our readers who brought this to our attention and apologize for any confusion.

Canada’s steel industry operates in a trade landscape where a single oversight—misclassifying a product’s Country of Manufacture—can lead to costly delays, audits, or retroactive tariffs.

With rising scrutiny on steel imports from non-United States-Mexico-Canada Agreement (USMCA) and non-Comprehensive Economic and Trade Agreement (CETA), businesses must navigate evolving compliance requirements to avoid financial penalties, supply chain disruptions, and exposure to unplanned costs.

This article explores how Canadian businesses can mitigate risks by proactively verifying Country of Manufacture via mill test reports, optimizing supply chains with USMCA/CETA partners, and strengthening customs documentation. For companies reliant on imported steel, preparedness isn’t just strategic—it’s essential for survival in an uncertain trade climate.

THE UNCERTAINTY AROUND TARIFFS AND STEEL IMPORTS

The Canadian steel market is highly integrated with global trade, with many businesses relying on imported stainless and carbon steel products for fabrication, infrastructure, and manufacturing.

Recent discussions on tariffs and trade enforcement mechanisms, particularly targeting imports from non-United States-Mexico-Canada Agreement (USMCA) and non-Comprehensive Economic and Trade Agreement (CETA) countries, are raising concerns about potential cost increases and supply chain disruption.

A key technical factor of importing is is Country of Melt (COM)—where the steel was melted and poured before processing.

Many importers assume tariffs are based on the country from which they purchased the product, but trade compliance is dictated by Country of Manufacture rather than the final country of sale.

HOW DO IMPORTERS AND BUYERS MITIGATE TARIFF RISKS?

Understanding Tariff Classifications and Their Impact on Costs

Steel imports into Canada are subject to classification under the Harmonized System (HS) Code, which determines duty rates.

The classification structure follows Chapter 72 of the HS Tariff Schedule, covering:

• Semi-finished steel (ingots, blooms, billets, slabs)

• Flat-rolled products (coils, sheets, plates)

• Long products (bars, rods, structural sections, pipe & tube)

A critical point for importers is that certain HS subheadings carry higher duties depending on origin and processing.

For example:

• 7222.11.00: Stainless steel ingots, which are often subject to basic duties.

• 7304.41.00: Stainless steel seamless pipes and tubes, where origin-based tariffs may apply.

When tariffs are introduced or modified, importers must reassess the specific HS code of their products to ensure correct classification.

Misclassification can lead to delays, additional audits, and retroactive duty payments.

Country of Manufacture and Traceability: The Technical Requirements

Understanding and documenting the Country of Manufacture has become increasingly important for Canadian businesses.

This classification determines whether a product is subject to tariffs and can impact the cost of imports.

Request that Country of Manufacture as well as COM (Country of Melt) be listed on the Mill Test Report (MTR) along with chemical composition, mechanical properties, and heat number.

If tariffs increase on steel from specific regions, Canadian importers may face scrutiny regarding Country of Manufacture verification and should prepare by ensuring:

• Accurate mill certifications from suppliers

• Internal documentation practices that track Country of Manufacture from purchase to final use

WHAT HAPPENS IF BUSINESSES DON’T PREPARE?

1. Unexpected Tariff Exposure: If tariffs are applied retroactively, companies that misclassified Country of Manufacture or didn’t have the correct documentation could face thousands—or even millions—of dollars in unexpected costs.

2. Supply Chain Disruptions: If Country of Manufacture and Country of Melt and Pour verification is unavailable during importation, shipments could be held at customs, leading to delays and project overruns.

3. Limited Sourcing Options: Relying on steel from higher-tariff Country of Manufacture sources may reduce access to cost-effective supply chains.

HOW TO STAY COMPETITIVE AND NAVIGATE UNCERTAINTY

Verify Country of Manufacture Before Purchase

• Ask mills and suppliers for pre-shipment MTRs to ensure the product’s Country of Manufacture aligns with tariff preferences.

• Work with vendors who provide traceable heat numbers and compliance documentation upfront.

Optimize Supply Chains Based on Tariff Exposure

• If tariffs increase on certain Country of Manufacturers, consider diversifying sourcing to include United States-Mexico-Canada Agreement (USMCA) or Comprehensive Economic and Trade Agreement (CETA)-based suppliers.

• Leverage Canadian Duty Deferral Programs to offset costs if processing occurs domestically before export.

Strengthen Import Documentation Processes

• Work with customs brokers who specialize in steel and industrial imports.

• Use a digital document management system to store and track Country of Manufacture records, MTRs, and HS classifications.

Consider Domestic Processing Options

• Some companies may reduce tariff exposure by importing semi-finished steel and completing processing in Canada, potentially altering HS classification to a lower-duty category.

• Evaluate contract toll processing to determine whether domestic finishing services can help mitigate tariff impact.

FINAL THOUGHTS

Steel tariffs remain an evolving issue for Canadian importers and manufacturers.

Whether new tariffs are introduced, or existing regulations are modified, companies that proactively manage Country of Manufacture  as well as Country of Melt and Pour compliance, supply chain diversification, and technical import documentation will be better positioned to adapt.

By ensuring proper MTR verification, customs compliance, and sourcing strategies, businesses can mitigate financial risks and maintain supply chain stability – even in a shifting trade environment.

For over four decades, Unified Alloys has been a trusted partner in North America’s stainless steel supply chain, providing support with tariff considerations, mill documentation, and seamless import solutions. Contact us today to discuss how we can streamline stainless steel procurement for your next project.