Market Data
U.S. Steel and Aluminum Tariffs: A Timeline of Trade Tensions and Impacts
The 2018 Tariffs and NAFTA Renegotiations
The imposition of U.S. steel and aluminum tariffs in 2018 marked the beginning of a contentious trade relationship between the U.S., Canada, and Mexico under President Donald Trump. The tariffs, which were set at 25% for steel and 10% for aluminum, were announced in March 2018, with a June 1 deadline for implementation. Trump initially exempted Canada and Mexico, but the reprieve was temporary. The U.S. leader explicitly linked the tariffs to the ongoing renegotiation of the North American Free Trade Agreement (NAFTA), which was proving to be a challenging process. Trump demanded greater access to Canadian and Mexican markets, while Canada held firm, even threatening to walk away from negotiations multiple times.
By May 31, 2018, the exemptions for Canada and Mexico expired, and the tariffs went into effect. The Canadian government responded with retaliatory tariffs targeting $16.6 billion worth of U.S. exports, including steel, aluminum, Harley-Davidson motorcycles, and other consumer goods. The retaliatory measures were strategically designed to impact key Republican states, highlighting the political nature of the trade dispute. The economic impact on Canada was significant, with industries like steel and aluminum production suffering job losses and reduced exports. For example, Tenaris SA, a steel pipe manufacturer, laid off 40 workers in Sault Ste. Marie, Ontario, as a direct result of the tariffs.
The Road to CUSMA: A New Trade Agreement
The trade tensions between the U.S., Canada, and Mexico ultimately led to the signing of the Canada-United States-Mexico Agreement (CUSMA) on November 30, 2018. However, the path to the new agreement was fraught with challenges. The U.S. tariffs remained in place until May 2019, when both countries reached a deal to lift the duties. The resolution came after months of negotiations, with Canada agreeing to ratify CUSMA shortly after the tariffs were removed. The new trade agreement was designed to replace NAFTA and address some of the concerns raised by the U.S., particularly regarding market access and trade imbalances.
Despite the signing of CUSMA, the economic impact of the tariffs lingered. Statistics Canada reported that steel exports to the U.S. fell by 38% in June 2018 and remained at their lowest level in nearly a decade by May 2019. Aluminum exports also declined significantly, with monthly exports dropping by an average of 19% compared to 2017. The effects of the tariffs were felt across the supply chain, with businesses forced to adapt to new realities and workers facing job losses.
Trump’s Re-election and Renewed Tariff Threats
President Trump’s re-election in 2024 marked a new chapter in U.S.-Canada trade relations, with the Republican leader promising to pursue an aggressive tariff policy in his second term. Trump specifically targeted Canadian and Mexican auto manufacturing, vowing to reopen CUSMA to address what he described as “loopholes” and “unfairness” in the agreement. The renewed tariff threats were not limited to trade issues; Trump also cited border security concerns, particularly the flow of fentanyl and illegal immigration, as justification for imposing new tariffs on Canadian and Mexican products.
In response to Trump’s threats, Canada announced a $1.3-billion plan to bolster border security, including increased resources for the Royal Canadian Mounted Police (RCMP) and the Canada Border Services Agency. However, the U.S. tariffs were not solely punitive in nature. Trump also signed an executive order in January 2025 initiating public consultations and studies on the impacts of CUSMA on American businesses, particularly farmers. These consultations were seen as a precursor to the scheduled 2026 review of the trade agreement.
The 2025 Tariffs and Retaliation
On February 1, 2025, Trump followed through on his tariff threats, imposing a 25% duty on Canadian imports, with a lower 10% rate for energy products. Canada responded swiftly, announcing a $30-billion retaliation package, followed by an additional $125 billion in tariffs on American goods. The retaliatory measures were designed to give businesses and supply chains time to adapt, but they also included bans on U.S. business contracts and American alcohol sales at the provincial level.
The U.S. tariffs were delayed for 30 days in early February, with Trump claiming that Canada and Mexico had made concessions on border security. However, the reprieve was short-lived. By February 10, 2025, Trump signed executive orders imposing tariffs on all steel and aluminum imports, including those from Canada and Mexico, effective March 4. Unlike the 2018 tariffs, these new measures included no exemptions, with Trump explicitly stating that previous carve-outs had undermined his efforts to revive the American steel and aluminum industries.
The impact of these tariffs was immediate and far-reaching. In Canada, the effects were particularly devastating for industries reliant on steel and aluminum exports. The Canadian Labour Congress reported that the 2018 tariffs had already forced 2,000 workers and 500 employers to rely on emergency government support. The 2025 tariffs threatened to exacerbate these challenges, with industries bracing for another round of economic disruption.
The Human and Economic Toll of Trade Wars
The ongoing trade tensions between the U.S. and Canada have highlighted the complex and often fraught nature of international trade negotiations. While tariffs are often justified as a means of protecting domestic industries and national security, they can have far-reaching consequences for workers, businesses, and consumers on both sides of the border. The 2018 tariffs alone resulted in an estimated 75,000 job losses in the U.S., according to a report by the U.S. Tax Foundation. In Canada, industries like steel and aluminum production were forced to adapt to reduced exports and a shrinking market, leading to layoffs and economic instability.
The retaliatory measures implemented by Canada in response to U.S. tariffs further complicated the trade relationship. By targeting products with significant manufacturing bases in key Republican states, Canada aimed to apply political pressure on the Trump administration to reconsider its tariff strategy. However, these measures also had unintended consequences, disrupting supply chains and increasing costs for consumers.
Looking Ahead: The Future of U.S.-Canada Trade Relations
As the U.S. and Canada navigate the latest round of tariff disputes, the future of their trade relationship remains uncertain. The scheduled 2026 review of CUSMA provides an opportunity for both countries to address ongoing issues and strengthen their economic partnership. However, the renewed tariff threats and the aggressive stance taken by the Trump administration suggest that trade tensions are unlikely to subside in the near term.
For Canada, the challenge lies in balancing its commitment to free trade with the need to protect its industries and workers from the adverse effects of U.S. tariffs. The government’s decision to retaliate with tariffs of its own reflects a determination to stand firm in the face of what many view as unfair trade practices. At the same time, the economic impact of these measures underscores the need for a more collaborative approach to trade negotiations, one that prioritizes the interests of workers and businesses on both sides of the border.
As the two nations move forward, the lessons of the past several years will be crucial in shaping the future of U.S.-Canada trade relations. The experience of the 2018 tariffs and their aftermath serves as a reminder that trade disputes are not won or lost overnight, but rather through sustained diplomacy, compromise, and a shared commitment to mutually beneficial outcomes.
