A Canadian flag flies above the steel mills in Hamilton, Ont. A new federal program will subsidize shipping Canadian steel within the country. Photo by Peter Power/Postmedia News

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The federal government says it will now cover 50 per cent of the cost of shipping Canadian steel across the country.

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Under a new Commodities Sectoral Support Program announced on Monday, steel shippers can apply for a rebate that will offset 50 per cent of the costs to ship domestic steel by rail or marine transport across provinces and territories.

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The program is backed by $100 million and is scheduled to run for one year or until its funds are fully diminished.

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Prime Minister Mark Carney and his cabinet have been trying to raise Canada’s consumption of domestically produced steel after the United States in 2025 imposed 50 per cent tariffs on Canadian steel.

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Since then, Carney has said Canada is too reliant on foreign steel and subsequently imposed progressively tighter quotas that limit the volume of foreign steel allowed to enter the country on a duty-free basis.

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“This is entirely consistent with the government’s approach to making it easier to build and buy Canadian,” Transport Minister Steven MacKinnon said.

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He also said there were some “obvious” price and logistical challenges to shipping steel across the country that the rebate aims to address.

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Last fall, the federal government had promised to help subsidize the cost of shipping steel across the country, which users on the West Coast had flagged as a major concern given that the majority of the country’s steel mills are located in Ontario and Quebec.

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Canada has two major railway companies and steel producers have complained it is not financially feasible to ship their products to users on the West Coast.

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Steel buyers in provinces such as British Columbia have also increasingly voiced concerns that steel is becoming more expensive and difficult to obtain, particularly after the federal government imposed its tariff revenue quotas.

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Under the current policy, countries that lack a free-trade agreement with Canada are now limited to shipping 20 per cent of the annual volume exported here in 2024. Above that, a 50 per cent tariff kicks in. Free-trade countries are limited to 75 per cent of what they shipped in 2024 before triggering the 50 per cent tariff.

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The question of why British Columbia does not use more domestically produced steel is a matter of fierce debate within the industry, with many steel producers saying such buyers turn to cheaper imports that originate in countries where steel is unfairly subsidized.

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Ravi Kahlon, B.C.’s minister of jobs and economic development, has said it is simply too expensive to ship steel across the country, whereas shipping by marine vessels leads to more affordable steel.