Ottawa is putting $100 million behind an attempt to change the economics of where Canadian manufacturers buy their steel, offering to reimburse half the eligible cost of moving domestically produced material across the country as US tariffs squeeze Canadian mills’ access to their largest foreign market.
Transportation Minister Steven MacKinnon announced the freight rebate program Monday, in which manufacturers can claim 50% of eligible rail or marine transportation costs for qualifying steel that originates in Canada and is shipped to another Canadian destination, according to The Canadian Press.
Ottawa’s stated objective is to make domestic suppliers more attractive to Canadian manufacturers that might otherwise source steel from the US or other foreign markets. Applications opened Monday and the program will remain available into next summer or until its funding is exhausted.
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A single recipient can receive as much as $50 million over the life of the program, equal to half of the entire program envelope.
The freight support itself is not a new policy idea. Prime Minister Mark Carney’s government announced in November 2025 that Ottawa would provide funding to Canadian National Railway and Canadian Pacific Kansas City to enable a 50% freight-rate discount on interprovincial shipments of Canadian steel and lumber beginning in spring 2026.
Instead of describing the relief as money provided to the two major railways to reduce rates, the new program is being presented as a $100 million reimbursement program for manufacturers.
The freight subsidy adds another layer to a broader strategy designed to redirect demand toward Canadian steel. Ottawa has already tightened tariff-rate quotas for steel imports from countries outside the CUSMA and imposed a 50% surtax when affected imports exceed specified quota levels. Canada has also introduced tariffs on certain steel derivative products.
Its Buy Canadian procurement policy separately requires Canadian steel and aluminum in major federal procurement projects under specified thresholds and conditions. The federal government has also committed $5 billion through the Strategic Response Fund and established a $1 billion Business Development Bank of Canada financing program for metal producers and exporters affected by tariffs.
The development comes as Canadian producers contend with a US trade regime that has sharply raised barriers to metal imports. Canada’s Trade Commissioner Service says current US Section 232 tariffs on covered steel, aluminum, copper, and derivative products range from 10% to 50%, depending on the product and sourcing characteristics.
The White House has described President Donald Trump’s current metal tariff regime as imposing a 50% full-value duty on many steel and aluminum products, with lower rates or other treatment for certain derivatives and products meeting specific US-content requirements.
