The new plan comes amid stalled trade talks between Ottawa and Washington.

Canada will offer more support to help the steel and lumber industries deal with United States tariffs and create a domestic market, as well as ramp up protections for steel and lumber workers.

Prime Minister Mark Carney outlined the new plan on Wednesday in a news conference.

Ottawa will reduce the quota for steel imports from countries that do not have a free trade agreement with Canada to 20 percent from 50 percent of 2024 levels, Carney said.

Countries with a free trade agreement (FTA) with Canada will see their quotas cut to 75 percent from 100 percent of the 2024 level. This does not include the US and Mexico, which are bound by the United States-Canada-Mexico free trade deal.

Canada will also impose a global 25 percent tariff on targeted imported steel-derivative products, and incorporate border measures to combat steel dumping.

In July, Ottawa set a quota of steel imports at 50 percent of the 2024 level from non-FTA countries in a bid to stop the dumping of foreign steel into Canada.

The measures are being tightened to open up the domestic market for Canadian-produced steel, said a government official.

The steel industry contributes more than 4 billion Canadian dollars ($2.8bn) to Canada’s gross domestic product (GDP) and employs more than 23,000 people directly. It is, however, one of the two sectors hit hardest by US President Donald Trump’s 50 percent tariffs on steel imports from Canada.

Trump has imposed 50 percent tariffs on steel, and softwood lumber, long subject to US tariffs, is currently taxed at 45 percent after the Trump administration’s hike last month.

Carney said the decades-long process of an ever-closer economic relationship between Canada and the US is now over.

“As a consequence, many of our strengths have become vulnerabilities. Last year, more than 75 percent of our exports went to the United States. Ninety percent of our lumber exports, 90 percent of our aluminium exports, and 90 percent of our steel exports, all bound for a single market,” Carney said.

Ottawa will work with railway companies to cut freight rates for the inter-provincial transfer of Canadian steel and lumber by 50 percent, beginning in early 2026.

“We will make it more affordable to transport Canadian steel and lumber across the country by cutting freight rates,” Carney said.

The government said it would also support the use of locally made steel and lumber in homebuilding, and financial aid for companies dealing with tariff-related impacts, such as on their workforce, liquidity crunch, and for restructuring operations.

Trump tensions

Trump cut off trade talks with Canada last month after the Ontario provincial government ran television advertisements in US markets that criticised Trump’s tariffs by citing a speech by former US President Ronald Reagan.

Carney said he would be in Washington for the final draw on December 5 for the FIFA World Cup 2026 tournament. He said he would speak to Trump then and said he spoke briefly to the president on Tuesday.

“We are ready to re-engage on those talks when the United States wants to re-engage,” Carney said.

Carney’s announcement comes even as there is increased pressure on US businesses reeling from Trump’s tariffs.

Deere & Co, the maker of John Deere tractors, said on Wednesday that it expects a bigger hit from tariffs in 2026. The company expects a pre-tax tariff hit of around $1.2bn in fiscal 2026, compared with nearly $600m in 2025.