The Trump administration is offering Canadian and Mexican steel and aluminum producers relief from steep 50% tariffs—if they commit to shifting production capacity into the U.S., a move that is already drawing backlash across North America and reshaping cross-border supply chains.
A notice published by the U.S. Department of Commerce on Thursday formalizes a process allowing companies operating in Canada or Mexico to apply for reduced tariffs if they invest in new U.S. production capacity.
The policy effectively ties tariff relief to onshoring commitments, marking a more aggressive phase of the administration’s broader strategy to use trade barriers to drive domestic manufacturing.
Tariff relief tied to U.S. production shift
Under the program, qualifying steel and aluminum producers can receive tariff reductions—potentially cutting duties in half—if they submit detailed plans to expand primary metals production in the U.S.
The relief applies only to imports tied to new U.S. capacity and is contingent on meeting strict milestones, including construction timelines, hiring plans and capital investment commitments, according to the Federal Register notice.
The initiative comes after the U.S. imposed tariffs of up to 50% on imported steel and aluminum from Canada and Mexico, measures that both countries argue violate the United States-Mexico-Canada Agreement (USMCA).
A report by CBC News noted the administration is offering “immediate tariff relief” to companies that agree to move production south of the border in the future, underscoring the conditional nature of the policy.
White House points to domestic investment wins
The Trump administration has pointed to recent manufacturing announcements as evidence the strategy is working.
U.S. Steel said it plans to restart its Gary Tin Mill in Indiana, a move expected to support about 225 jobs and boost domestic supply for packaging and industrial uses.
Meanwhile, Marubeni-Itochu Steel America (MISA) announced it will build a $37 million steel processing facility in Osceola, Arkansas, creating 35 jobs and expanding its North American footprint.
Canada, Mexico push back ahead of USMCA review
The policy is intensifying tensions with U.S. trading partners just months ahead of the scheduled USMCA review.
Canadian and Mexican officials have both argued the tariffs—and the conditions attached to relief—undermine the spirit of the trade pact. Canada’s leadership has called the duties “violations” of the agreement, while signaling willingness to negotiate but not concede to U.S. demands.
Industry groups and labor unions have been more blunt.
The United Steelworkers union described the tariff relief offer as “economic coercion,” arguing it pressures companies to relocate production and jobs out of Canada, according to a news release.
Business groups such as the Ontario Chamber of Commerce warn the broader expansion of Section 232 tariffs is already disrupting integrated supply chains across the Great Lakes region, raising costs and putting thousands of manufacturing jobs at risk.
In 2025, the U.S. imported roughly 13% of its steel and 60% of its aluminum consumption, with total metal imports (iron, steel, aluminum, copper) valued at approximately $154.9 billion, down slightly from 2024.
The main origins of metal imports to the U.S. last year were Canada ($27.2B), China ($18.5B), Mexico ($15.7B), Chile ($9.12B) and South Korea ($7.66B), according to the Observatory of Economic Complexity.
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