A recent adjustment to U.S. metal tariffs by President Donald Trump has sent shockwaves through Canada's manufacturing sector, extending punitive measures far beyond their original scope. What was intended as a simplification of administrative procedures has instead broadened the reach of tariffs, affecting a wide range of industries across the country.
From Metal Content to Full Product Tariffs
Previously, the United States imposed a 50% tariff on the proportion of steel, aluminum, and copper content within a product. However, U.S. importers found this calculation overly complex. In response, the new rule, effective April 6, applies a 25% tariff to the entire value of the product, significantly increasing export costs.
This change has largely gone unnoticed amid other global events, according to Desjardins Group economists led by Hendrix Vachon. However, the Canadian government acknowledged the severity of the impact on Monday, announcing a $1.5 billion aid package for affected manufacturers. The package includes $500 million for the Regional Tariff Response Initiative, offering grants to smaller manufacturers, and $1 billion in financing through the Business Development Bank of Canada.
Immediate Impact on Key Provinces
Companies in Canada's manufacturing heartland—Ontario and Quebec—are already feeling the strain. Manitoba, a significant exporter of metal products to the U.S., is also expected to be affected. The changes are particularly harsh for producers of high-value-added goods. For instance, a product worth $10,000 with 20% metal content previously incurred a $1,000 tariff; under the new rules, the tariff jumps to $2,500.
Ski-Doo manufacturer BRP Inc. is a notable example. In April, the company withdrew its financial outlook for fiscal 2027, citing $500 million in additional costs from the tariff change. Its shares have since dropped by 30%.
Broader Scope of Tariffs
The adjustment has expanded the tariff's reach from metals to a wide array of products. In Quebec, Desjardins estimates that a quarter of the province's exports are now subject to sector-specific tariffs. Consequently, Quebec's effective tariff rate has risen by 1.4 percentage points to 9%, double the Canadian average of 4.2%. Ontario's rate has climbed to 6.7%.
These additional burdens come at a time when provinces are already struggling under Trump's broader tariff regime. Quebec, heavily reliant on trade with the U.S., has seen exports decline across various categories, including primary metals and light trucks. Ontario's exports have dropped even more sharply, particularly in the auto sector, which accounted for a quarter of the province's U.S. shipments in 2025. Passenger vehicle exports have fallen by over 46%, while rolled steel products have decreased by more than 60%.
