Canada has signed on to a tougher international strategy for dealing with steel overcapacity at a moment when its own producers are struggling with U.S. trade barriers. At a September 30 meeting in Milwaukee, members of the Global Forum on Steel Excess Capacity agreed to a new framework encouraging stronger trade enforcement, closer tracking of steel flows and action against subsidies that keep uneconomic production alive. Canada was already a member of the forum, so the development is more accurately described as Ottawa joining the consensus behind the new “Milwaukee Framework,” rather than entering a new organization.
The timing is striking. Canadian mills are simultaneously dealing with 50% U.S. Section 232 steel tariffs, weaker cross-border demand and growing pressure to find more customers at home.
Canada Was Already at the Table—What Changed in Milwaukee
The September 30 agreement represents a significant expansion of what participating steel-producing economies say they are prepared to do about global overcapacity. The U.S.-chaired meeting brought together members and invited countries in Milwaukee, where ministers reached consensus on the Comprehensive Framework for Joint Action. Canada was specifically listed among the participants. The Global Forum itself consists of 28 market-oriented economies, including Canada, the United States, the European Union, Japan, South Korea, Mexico, Brazil, Türkiye and several major European steel-producing countries.
That distinction matters because Canada is not suddenly aligning itself with Washington on steel policy. It has participated in the forum for years and has already been tightening its own trade protections. What changed in Milwaukee was the level of proposed coordination. The framework says members intend to reinforce one another’s national actions against market-distorting practices, while acknowledging that individual governments can move at different speeds and use different tools. Each country will still implement measures through its own laws and according to its international obligations.
For Canadian producers, that makes the agreement potentially more consequential than another broad declaration against unfair trade. Ottawa is now part of an effort designed to turn concern over surplus steel into more coordinated enforcement.
The New Framework Calls for More Than Just Tariffs
Tariffs received much of the immediate attention, especially after U.S. Trade Representative Jamieson Greer urged other countries to take stronger action. But the Milwaukee Framework is considerably broader. It calls on members to reduce or eliminate market-distorting subsidies that support chronically unprofitable plants or encourage uneconomic capacity expansion. Governments are also supposed to provide more information about their own steel subsidies and scrutinize non-market policies outside the group.
Another major component is tracking where steel actually originates. Members are encouraged to collect “country of melt and pour” information, strengthen import-monitoring systems and exchange data when suspicious trade patterns emerge. The idea is to make it harder for steel covered by tariffs or other restrictions to be rerouted through another country before entering a protected market.
The framework also explicitly contemplates antidumping cases, countervailing-duty investigations and safeguards, including the possibility of governments initiating cases themselves. Members can consider additional measures on both steel and steel-containing derivative products from sources associated with excess capacity. Cooperation against circumvention and trade diversion is another stated objective.
In practical terms, the agreement creates a playbook rather than a single common tariff.
A 745-Million-Tonne Problem Is Driving the Push
The underlying numbers help explain why steel-producing governments are increasingly willing to intervene. The OECD estimates global excess steelmaking capacity reached roughly 640 million tonnes in 2025 and could climb to 745 million tonnes by 2028. Planned additions through 2028 could total nearly 139 million tonnes even though worldwide steel demand is expected to grow only slowly. Capacity utilization could consequently slip to around 74% or lower by 2028.
China is central to the debate, although Beijing rejects accusations that its industrial policies amount to unfair overcapacity. OECD data show Chinese steel exports reached a record 131 million tonnes in 2025, up 153% from 2020. The organization also estimates that the median Chinese steel company received subsidies relative to assets roughly 15 times larger than the median producer elsewhere in 2024. China is not a member of the steel forum.
The challenge for Canada is that surplus steel does not have to arrive directly from China to affect Canadian mills. When large markets erect barriers, displaced material can seek another destination, adding pressure elsewhere. That fear of trade diversion has already shaped Ottawa’s tariff policies.
Canada Is Fighting Overcapacity While Facing a 50% U.S. Steel Tariff
Canada’s position is unusually complicated because the country broadly agrees with Washington that global steel distortions require stronger action while Canadian steel itself remains subject to steep U.S. tariffs. President Donald Trump raised the additional Section 232 tariff on many steel imports from 25% to 50% in June 2025. The administration further modified the metals tariff system in 2026, while maintaining the 50% rate on steel articles covered by the measures.
That matters enormously because the Canadian industry was built around a deeply integrated North American market. Statistics Canada calculated that U.S. demand supported about $3.4 billion of Canadian iron-and-steel-mill value added and approximately 9,800 payroll jobs in 2024. Roughly 67% of employment in iron and steel mills and ferro-alloy manufacturing was associated with U.S. demand that year. By December 2025, Canadian exports of unwrought iron, steel and ferro-alloys to the United States were already down 20.2% from 2024.
Earlier federal data put the Canadian steel industry’s direct workforce above 23,000 jobs, with much of its production concentrated in Ontario and Quebec. That makes changes in American market access especially important for communities built around large mills.
The Pressure Is Now Visible on Canadian Factory Floors
Stelco provided one of the clearest examples in late September. The Cleveland-Cliffs-owned producer announced plans to idle finishing operations at Hamilton Works, affecting as many as 500 employees across its operations. Stelco said the U.S. tariff environment had sharply reduced the available market for cold-rolled and galvanized steel, while weak Canadian demand and imports were adding to the pressure. Its reported demand for those products was almost 25% below the 2024 quarterly average, including a roughly 10% drop in Canadian demand.
Algoma Steel in Sault Ste. Marie has undergone an even more dramatic restructuring. The company issued layoff notices to 1,005 unionized employees as it accelerated its move away from blast-furnace steelmaking and toward electric-arc furnaces. Algoma reported that U.S.-bound shipments represented just 23% of its total steel shipments in the second quarter of 2026, compared with 54% a year earlier. The company recorded $18.7 million in direct tariff costs during that quarter and said the U.S. measures had effectively closed off much of its traditional American market.
ArcelorMittal Long Products Canada also permanently closed its Hamilton wire-drawing operation, affecting 153 employees, although the company described that decision as a broader competitiveness restructuring.
Ottawa Has Been Building Its Own Steel Defences
Canada has not waited for the Milwaukee agreement to strengthen its border measures. Ottawa introduced tariff-rate quotas on steel imports in 2025 and subsequently tightened them. Current quota levels generally allow non-free-trade-agreement partners volumes equal to 20% of their 2024 imports before a 50% surtax applies; non-CUSMA free-trade partners generally receive quotas equal to 75% of 2024 levels. Ottawa extended the regime into 2027, saying the measures were intended to limit trade diversion and the effects of global excess capacity.
Canada has also retaliated directly against American trade measures. Effective September 8, 2026, Ottawa imposed new counter-tariffs at rates of 15%, 25% or 50% on $27.6 billion worth of U.S. imports, with steel among the sectors targeted. Certain U.S. steel and aluminum goods now face Canadian rates of 25% or 50%. The government paired those countermeasures with a broader $7.5-billion package of business and worker supports.
Another initiative launched in August offers a 50% rebate on eligible rail and marine freight costs for Canadian steel moving between provinces, backed by as much as $100 million. The objective is to make it easier for mills losing export opportunities to reach more customers inside Canada.
The U.S.-Canada Relationship Creates an Obvious Policy Tension
The Milwaukee agreement creates an unusual situation: Canada and the United States are cooperating on a framework intended to defend market-oriented steel producers while simultaneously imposing substantial steel tariffs on one another. Greer has presented U.S. tariffs as part of Washington’s response to excess capacity and has encouraged other countries to adopt similarly forceful policies. The Canadian government, meanwhile, has consistently sought relief from U.S. steel tariffs while strengthening its own measures against trade diversion and subsidized imports.
Nothing in the Milwaukee Framework automatically resolves that bilateral dispute. The document does not establish tariff-free trade among members, nor does it require the United States to exempt Canadian steel. Instead, members retain considerable discretion to take actions under their own laws, circumstances and trade commitments. The framework even states that the ambition of measures may vary between participating economies.
That means Ottawa can work alongside Washington on Chinese subsidies, circumvention and surplus capacity while still contesting the treatment of Canadian steel at the U.S. border. The two issues are politically linked but legally and institutionally separate.
Canadian Mills Are Being Pushed Toward a More Domestic Strategy
Tariffs are already changing how Canadian producers think about their customer base. Algoma has deliberately shifted toward what it calls a “Canada-centric, plate-first strategy.” In the second quarter of 2026, total shipments fell to about 181,000 tons from 472,000 tons a year earlier, although the comparison was also heavily affected by Algoma’s transition to electric-arc-furnace production. The company says concentrating on discrete plate gives it a stronger position because it is Canada’s only producer of that particular product.
Stelco’s restructuring points in a similar direction, although through a different route. The company plans to concentrate more production at its Lake Erie Works in Nanticoke as finishing activity is reduced in Hamilton. Stelco maintains that the restructuring will not necessarily reduce total Canadian steel tonnage, and some affected employees are expected to have opportunities at the Lake Erie operation.
Ottawa is attempting to reinforce that domestic pivot through procurement policies, freight assistance and protection against import surges. The challenge is scale: replacing a large and geographically convenient U.S. customer base with Canadian demand cannot happen instantly, especially for mills designed around continental supply chains.
The Milwaukee Framework Now Has to Produce Measurable Action
The next test will be implementation. GFSEC governments agreed to review the effectiveness of their actions annually, while ministers also called for the forum’s mandate—which was due to expire at the end of 2026—to be extended for another three years. Future work is expected to include better information sharing, stronger anti-circumvention systems, closer scrutiny of subsidies and consideration of additional responses to persistent non-market practices.
For Canada, the measurable outcomes will be easier to see on factory floors than in ministerial communiqués. Steel producers need to know whether offshore import pressure eases, whether domestic prices stabilize, whether U.S. market access improves and whether mills can maintain employment while redirecting production. The most recent developments at Stelco and Algoma illustrate how quickly trade policy can translate into changes in shifts, product lines and investment plans.
The Milwaukee Framework gives Canada another international mechanism for attacking the global overcapacity problem. It does not, however, remove the 50% tariff facing Canadian steel at the U.S. border. For an industry caught between those two pressures, that distinction may determine how much practical relief the new agreement ultimately delivers.
