Industry Minister François-Philippe Champagne directed his department on Wednesday to prioritize investments in projects that primarily use Canadian steel and aluminum — part of Ottawa's reply to the Trump administration's trade war.
The move comes as Canada's steel industry starts laying off workers in anticipation of production slowdowns.
Champagne said the move was in response to the "unfair and unjustified" 25 per cent tariffs on steel and aluminum levied by U.S. President Donald Trump the day before.
Canada replied to Trump's steel and aluminum levies with 25 per cent tariffs on $29.8 billion worth of American goods, which took effect just after midnight Thursday.
Champagne said Canadian steel and aluminum support vital U.S. industries, including defence and automotive manufacturing.
"They are also essential for securing our collective energy future and generate high-quality jobs on both sides of the border," he said in a statement published Thursday morning.
About a quarter of all steel used in the U.S. is imported and Canada is the United States' largest source of both steel and aluminum.
The Trump administration has used tariffs in an attempt to push the auto sector to move production to the United States.
The head of the Canadian Steel Producers Association warned in a media statement Wednesday that the tariffs will hit the industry hard in both Canada and the U.S.
"These tariffs will have devastating repercussions on both sides of the border for workers and communities that rely on a strong North American steel industry. Indeed, many are already feeling the impacts," said CSPA president and CEO Catherine Cobden.
Layoffs have already started to hit steel plants in Canada.
Roughly 30 people were let go permanently late last week at Ivaco, an eastern Ontario steel plant run by Canada Metal Processing Group, the United Steelworkers union said in a media statement.
The union, which represents more than 470 workers at the plant, said more than 120 people at the site received temporary, one-week layoffs on Wednesday when the U.S. steel and aluminum tariffs went into effect.
“We are calling on the federal government to take immediate and decisive action to protect the Ivaco workers – and all workers affected by the devastating U.S. tariffs – and to safeguard our industries,” said Kevon Stewart, USW District 6 director, in a media statement.
USW also said 20 people in supervisory, office and technical roles were given what appeared to be temporary layoffs at Algoma Steel in Sault Ste. Marie last week. The union added it was not clear what role tariffs were playing in the layoffs.
Algoma Steel Group Inc. CEO Michael Garcia said Thursday his company is in the midst of "aggressive" cost cuts as it copes with uncertainty caused by the ongoing trade war.
On the company's quarterly earnings call, Garcia said that Algoma is talking to federal and provincial leaders to determine what forms of government support might be available to help offset the tariffs.
At an event alongside steelworkers in Hamilton, Ont. on Wednesday, prime minister-designate Mark Carney said that proceeds from Canadian tariffs should go to supporting workers in affected industries and promised to "double down" on partnerships between the federal government and industry.
Since the trade war began, NDP Leader Jagmeet Singh has been calling for Canada to change its procurement rules to require that federal building projects use 100 per cent Canadian steel and aluminum.
Champagne took part in a Canadian delegation to Washington on Thursday to meet with Trump's commerce secretary to talk about the trade dispute.
