Watching the federal government’s budget unfold next week has steel executives across Canada holding their breath. After months of intense lobbying efforts, the industry hopes Ottawa will finally implement a “Buy Canadian” steel procurement policy—a move that could provide a desperately needed boost to domestic producers grappling with global competition and economic headwinds.
“The government has a tremendous opportunity to support Canadian jobs and manufacturing with a simple policy shift,” says Catherine Cobden, president of the Canadian Steel Producers Association. “When taxpayer dollars build infrastructure, they should prioritize Canadian steel that meets our environmental standards and supports communities across the country.”
The steel industry’s call comes amid challenging times. ArcelorMittal Dofasco in Hamilton recently idled a blast furnace, while Algoma Steel in Sault Ste. Marie has seen fluctuating production volumes as global steel prices remain volatile and imports continue flooding North American markets.
The proposed procurement policy would mirror similar American protections that have given U.S. producers a competitive edge for decades. South of the border, the Buy American Act requires federal projects to source domestic steel and manufactured products with limited exceptions. Meanwhile, Canadian producers must compete not only with American mills but increasingly with cheaper steel from countries with fewer environmental regulations.
“We’re not asking for handouts—just a level playing field,” explains Alan Kestenbaum, CEO of Stelco Holdings. “When we compete fairly, Canadian steel is world-class in both quality and sustainability.”
Industry analysis from the Bank of Canada suggests manufacturing sectors like steel face multiple challenges beyond procurement policies. Interest rates, though coming down, have dampened construction activity—a key consumer of steel products. The housing slowdown has particularly hurt demand for structural steel, while automotive production remains below pre-pandemic levels despite recent investments in electric vehicle manufacturing.
Data from Statistics Canada shows steel imports have increased 12% year-over-year, with significant volumes coming from countries with less stringent carbon regulations. This creates what industry insiders call “carbon leakage”—where production shifts to regions with looser environmental standards, potentially increasing global emissions while undercutting Canadian producers.
Finance Minister Chrystia Freeland has hinted at measures to strengthen Canadian manufacturing in the upcoming budget. During a recent tour of industrial facilities in Hamilton, she acknowledged the steel industry’s concerns but cautioned that any policy would need to balance procurement preferences with Canada’s international trade obligations.
“We understand the strategic importance of maintaining strong domestic steel production,” Freeland told reporters. “But we must craft policies that work within our trade frameworks while supporting Canadian industry.”
Trade experts caution that implementing a strict Buy Canadian policy isn’t without complications. The most significant hurdle is Canada’s trade agreements, including CUSMA (the successor to NAFTA), which limits the government’s ability to discriminate against foreign suppliers in procurement processes.
“The government will need to navigate carefully to avoid trade disputes,” explains Debra Steger, former WTO Appellate Body member and professor at the University of Ottawa. “There are ways to structure procurement to favor domestic production without explicitly violating trade agreements, but it requires careful policy design.”
What might such a policy look like? Industry proposals suggest requiring certain percentages of Canadian steel in federal infrastructure projects, implementing lifecycle carbon assessments that would favor lower-emission domestic production, or creating preferential bidding systems that give additional points to proposals using Canadian materials.
Beyond procurement policies, steel executives point to other challenges requiring attention. Energy costs remain significantly higher in Ontario compared to competing jurisdictions in the U.S., putting additional pressure on manufacturers. The carbon pricing system, while supported in principle by many producers, creates immediate cost pressures that foreign competitors often don’t face.
“Buy Canadian is crucial, but it’s one piece of a larger puzzle,” notes Mark Bula, chief commercial officer at a mid-sized Ontario steel processor. “We need a comprehensive industrial strategy that addresses energy costs, regulatory burdens, and innovation support.”
Workers on the ground feel the uncertainty acutely. In steel towns like Hamilton and Sault Ste. Marie, generations of families have relied on mill jobs that provide middle-class wages and benefits. Recent production cutbacks have sparked concerns about long-term viability.
“People are worried,” says Mario Oliveira, a third-generation steelworker at ArcelorMittal Dofasco. “We’ve weathered downturns before, but this feels different with all the imports and changing markets. We need the government to have our backs.”
The steel industry points to its environmental progress as another reason to favor domestic production. Canadian producers have reduced emissions intensity by approximately 25% since the 1990s according to industry data, with massive investments planned for further decarbonization. Algoma Steel’s $700 million electric arc furnace project represents one of Canada’s most significant industrial climate investments.
Whether these arguments persuade the government remains to be seen. Budget watchers suggest some form of procurement preference is likely, but the details will determine its effectiveness. With manufacturing employment declining in traditional industrial regions, political pressure to act has intensified.
As budget day approaches, steel executives continue making their case. They argue that a strong domestic steel industry isn’t just about jobs but national security, infrastructure resilience, and climate goals. Whether Ottawa delivers the procurement policy they seek—and whether it will be enough to address the industry’s broader challenges—will soon become clear.
For communities built around steel production, the stakes couldn’t be higher. Their future may hinge on whether Canadian steel becomes the material of choice when building the nation’s future.
