Magma Second Opinion, Issue 0, October 2026
US tariffs on Canadian steel and aluminum
Who this is forYou set pricing, treasury or strategy at a Canadian company that ships steel or aluminum to the US. This quarter you lock 2027 prices, surcharge terms and landed-cost models.
What to do this quarterIf a 2027 price, surcharge or landed-cost line of yours depends on the US tariff, plan it at the 50 percent rate and carry a cut as a named upside with its own trigger, not as the base case. Re-read the line when a trigger fires (a formal negotiating round, a new proclamation), not only on 2027-01-04, when this call is scored.The call: REFUSE. The public evidence does not support planning on a US tariff cut before 2027. The state of talks is confirmed by a major-press report of Canada's chief negotiator: formal negotiations halted since August, no round scheduled, officials still in contact.
The sharpest findingSame 50 percent tariff, opposite results: Canadian steel exports to the US fell 27.8 percent by value from January to August, aluminum rose 17.2 percent, and the only forecast of relief is for aluminum.
Signed by Daniel Zivkovic, Magma Inc., 2026-10-24.
A free sample built from public sources; commission one on your own question.
The one-page summary
Question this month: should a 2027 plan assume the US keeps 50 percent on Canadian steel and aluminum?
The US rate
50 percent on Canadian primary steel and aluminum, with no Canada or CUSMA carve-out [5][7]; watch for a proclamation lowering it, or a scheduled negotiating round, by 2026-12-31.
Steel and aluminum are splitting
Steel (HS 72) exports to the US down 27.8 percent and aluminum (HS 76) up 17.2 percent, January to August 2026 against 2025, in Canadian dollars [3]; watch whether the Bank of Canada sees the same split on 2026-10-28.
The diversification axis
Aluminum exports to non-US markets up about 84 percent, with the US share of aluminum exports down from 87.0 to 81.0 percent [3]; watch Budget 2026 on 2026-11-05 for the doubling goal.
Stacking
Primary steel and aluminum outside the Section 338 lists, which have stacked on Section 232 for motor vehicles and alcohol since 2026-09-15 [9]; watch for a list change adding metal-heavy goods by 2026-11-02.
What changed since the last issue
Baseline (first issue); the next scheduled movers are the Bank of Canada Monetary Policy Report on 2026-10-28 and Budget 2026 on 2026-11-05.
The call, and what would change it
Assumption: The US cuts its 50 percent Section 232 tariff on Canadian primary steel or aluminum before 2027-01-01.
Why: The 50 percent rate is in force with no Canadian carve-out [5][7], formal negotiations have been halted since August with no round scheduled, though officials are still in contact [21], and the one source that expects relief before the midterms is a reputable desk's forecast on aluminum only, read second-hand, that current talks do not support [17]. No dated signal points toward relief: a reported 50 percent on Canadian autos and parts from 2027-01-01 [19] widens the 50 percent rate rather than lowering it, and the January 2026 baseline in which the USMCA "is renegotiated promptly after the July 1 review date" from Oxford Economics did not happen while its status-quo scenario did [20]. One reading points against this call: a Polymarket price of 57 percent for a US-Canada agreement to lower tariffs (2026-10-23, public talk shown for context and not counted; resolution date not captured). This is a conservative planning convention, not a conclusion the evidence rows establish.
Alternative reading: a sceptical reviewer holds that the evidence shows relief is contested, not excluded, and would carry it as an upside case to price rather than set it aside. Both readings plan at 50 percent; they differ in how much weight the reader gives the market price and the ten weeks left.
What would change the call: The call reverses, and a cut becomes the base case, on a proclamation or Federal Register notice, dated before 2027-01-01, that sets the general Section 232 rate on Canadian primary steel or on Canadian primary aluminum below 50 percent, or a quota with an in-quota rate below 50 percent, with an effective date on or before 2027-01-01. It softens, and a cut becomes a live case to prepare for, if either government announces a formal negotiating round before 2026-12-15, or on a joint statement until the instrument is published. The only relief forecast in the table concerns aluminum [17], so the assumption is most live for aluminum; steel has no relief forecast at all. Reference: in 2019 the tariffs came off three days after a joint statement (2019-05-17 to 2019-05-20) [29], so a cut can arrive with little warning.
Confidence: Medium. The legal state is clear; the politics can turn in a week, as 2019 showed.
The call, in full
What this means for your plan: A reader carrying this assumption would move relief from the base case to a named upside case: price Q1 2027 contracts, surcharge terms and landed-cost models with 50 percent as the scenario to test against their own margins and contracts, with relief as an upside that has its own trigger (what would change the call, above) and a Q1 review date. Two cautions that are theirs to compute: the tariff is not the landed cost (the US Midwest premium moved more than the tariff in 2026 [27], so relief at the border may not reach the invoice), and the call says nothing about the rate after 2027-01-01.
How strong the evidence is: The legal state is confirmed in primary text, the proclamations in force [5][6][7]. The state of talks is confirmed by a major newspaper's report of Canada's chief negotiator, and corroborated by CBC [21]. The only relief forecast is a reputable desk's view on aluminum, read second-hand [17], and the step-up report has no proclamation behind it yet [19]. The weakest of these, the relief forecast, sets the overall grade.
How it is scored: Scored on 2027-01-04 against whether the US cut its general rate on Canadian primary steel or aluminum below 50 percent before 2027-01-01, read in the Federal Register (a cut later reversed still counts); the full rule is in the call log (call W0-01).
The method, in three lines
1. The fixed axis. Canada's Budget 2025 commits to "double non-U.S. exports over the next decade, generating $300 billion more in trade" (Budget 2025, Chapter 2 [1]). The Budget 2025 home page words it as "double our overseas exports within a decade" [2]; the chapter text is the commitment we track, and the two wordings are not the same measure. Every issue reads the US tariffs as movement on this one axis. Scope this month: steel and aluminum sit under Section 232 at 50 percent with no Canada or CUSMA carve-out (Proclamations 10947, 11021, 11032 [5][6][7]). Section 338 (Proclamations 11046, 11047, 11048, in force 2026-08-22) covers alcohol, dairy and motor vehicles, not steel and aluminum; the C$27.6 billion figure is Finance Canada's description of that US action and the size of Canada's counter-tariffs [9][10].
2. What the watch does. It reads what credible sources publish on one question, aligns them on geography, metric, horizon and stated assumption, grades each one, shows where they disagree and by how much, and records what changed since the last issue. The reading is done by hand with AI assistance; the grades, the call and the signature are a person's.
3. What it is not. Not a prediction, and not advice on any security or issuer. No returns are claimed and no private data is used. The call is a dated judgment on one public assumption, scored in public.
How to read a gradeGrades: the letter rates the source, A (proven reliable) to F (cannot be judged); the number rates the claim, 1 (independently confirmed) to 6 (cannot be judged). Full scale on the Sample Reports page.
The evidence base: comparable claims
This table scrolls sideways.
| Source | What it says (verbatim, short) | Metric and horizon | Stated assumption | Direction | Size | Grade |
|---|---|---|---|---|---|---|
| Federal Register, Proclamation 11021, signed 2026‑04‑02, effective 2026‑04‑06 [5] | Rate on Annex I-A aluminum and steel articles "shall be: (a) 50 percent, unless a lower rate of duty applies"; the lower rates cover UK content and US-melted derivatives only | Legal rate, in force with no end date; June changes to derivatives run to 2027-12-31 [6] | The law as written, no end date | Unchanged | 50% on full customs value | A1: Primary legal text, read in full; Finance Canada confirms no CUSMA exemption [10] |
| S&P Global Energy Horizons, aluminum analysts, 2026‑09‑28, via Hellenic Shipping News 2026‑10‑09 [17] | "Our base view remains that a deal to reduce US tariffs on Canadian aluminum is still in the offing ahead of the midterm elections" | Rate on aluminum, by 2026-11-03 | A deal before the midterms | Down (aluminum only) | Not stated | C3: Reputable desk, but a forecast that current talks do not support; read via a republisher |
| TD Securities, Robert Both, 2026‑08‑26, via FXStreet [18] | "the proposed reductions to steel/aluminum (50% to 25%) and autos (15% from 25%)" had they "gone ahead" | The offer on the table before talks collapsed on 2026-08-21 | Counterfactual: the August offer had gone ahead | Shows the size of the relief case | 50% to 25% | B2: Major bank desk; read via a feed, not the original note |
| Conference Board of Canada, David K. Young and John Gardner, 2026‑09‑02 [19] | "The US then responded with raising existing tariffs on steel, aluminum, autos, and auto parts to 50% effective January 1" | Scope of the 50% rate from 2027-01-01 | The step-up is decided | Up (wider scope) | 50% extended to autos and parts | B3: Credible publisher; no proclamation found for it, other coverage calls it a threat |
| Oxford Economics, "USMCA scenarios", 2026‑01‑23 [20] | Baseline (50% probability): prompt renegotiation with "smaller 10% targeted tariffs remaining in place for Canadian steel, aluminium, and dairy products"; "Status Quo Scenario (35% probability)": current tariffs stay "permanently" | Rate on metals, 2026 | Scenario odds as of January 2026 | Was down; the status-quo case happened | 10% (baseline) vs 50% (status quo) | B2: Established forecaster; used here as a calibration point, the baseline did not happen |
Comparable spread. Metric: the general US tariff rate on Canadian primary steel and aluminum. Horizon: through 2027-01-01. Geography: Canada to US.
The spread. The comparable sources put the general US rate on Canadian primary metal at 2027-01-01 between 10 percent (Oxford's January baseline, which has not happened [20]) and 50 percent (the law in force [5], Oxford's status quo [20]). Among sources dated after talks broke off in August, the range is 25 percent (the reduction on the table before the collapse, a counterfactual rather than a forecast [18]; S&P gives no rate [17]) to 50 percent, so 25 percentage points. This range is illustrative: the evidence holds one live relief forecast with no number, one counterfactual and the law, not a set of forecasts. The 2027-01-01 step-up widens the scope of the 50 percent rate rather than raising it [19].
Where the disagreement is sharpest
Relief before the midterms against no talks at all: S&P's base view expects an aluminum deal before 2026-11-03 [17]; the latest report has no round scheduled and formal negotiations halted since August, with officials still in contact [21].
Aluminum and steel do not get the same answer: the relief case is about aluminum, where the US depends on Canada for "75 per cent of its imported primary aluminum" (Aluminium Association of Canada [16]) and Canadian aluminum exports to the US rose 17.2 percent in value this year despite the tariff [3]; no source in this reading forecasts relief for steel.
Relief or step-up on 2027-01-01: the Conference Board reads a 50 percent step-up as decided [19], other coverage calls it a threat, and no primary text for it was found.
Not comparable, shown for context
This table scrolls sideways.
| Source | What it says (verbatim, short) | Metric and horizon | Direction | Size | Grade | Why not comparable |
|---|---|---|---|---|---|---|
| Statistics Canada, customs basis, domestic exports, via Trade Data Online, data to August 2026 [3] | HS 72 to the US C$4,020M; HS 73 C$2,866M; HS 76 C$10,917M, January to August 2026 | Export value, Jan to Aug 2026 vs 2025 | Steel down, aluminum up | HS 72 -27.8%, HS 73 -22.3%, HS 76 +17.2%; against Jan to Aug 2024 (derived) HS 72 about -45% | A1 (inputs); percentages and the 2024 base computed | Export value in current dollars, not the tariff rate, and not tonnes |
| Bank of Canada, MPR In focus, 2026‑04‑29 [11] | "steel exports have fallen by half"; aluminum, after falling 50%, "regaining over half of their initial losses" | Export change since the 2025 tariffs | Steel down, aluminum recovering | Steel about -50% | A2 | Export volumes, not the rate |
| Scotiabank Economics, Villeneuve and Fanjoy, 2026‑07‑07 [13] | "steel (-49% vs May 2024)"; aluminum exports "51% m/m jump, driven by increased shipments to Europe" | One month (May 2026) against May 2024 | Steel down | -49% | B2 | Single month; exports, not rate |
| CSPA via Reuters, 2026‑10‑16 [14] | shipments to the US "fell approximately 60% in 2025" | Calendar 2025 against 2024 | Down | About -60% | B2 | Full-year 2025, volumes; with the three rows above, steel exports to the US sit 45 to 60 percent below the pre-tariff level depending on period and on value or volume |
| Alcoa CFO Molly Beerman, 2026‑09‑10, via S&P Global [27] | "Even if we were to have a favorable rate with Canada, we don't see the Midwest [Premium] dropping significantly" | US aluminum premium if the rate is cut | Small change | Not stated | B2 | US buyer price, not the Canadian rate |
| Bank and forecaster estimates of the August 2026 round: TD Securities [18], Oxford Economics [22], RBC and CIBC via the Globe and Mail [23] | "~0.3pp from the level of GDP by the end of 2027" (TD); "about 0.3%" (Oxford); 0.4% (RBC); "about 0.5 per cent" (CIBC) | Canada real GDP level, about 2027 | Down, small | -0.3% to -0.5% | B2 | Economy-wide, not metals; comparable with each other, not with the next row |
| Parliamentary Budget Officer, Tim Scholz, 2026‑10‑20 [24] | Combined measures since early 2025 cut real GDP "by 1.4 per cent after five years"; "firms are adapting to the new trade environment more quickly than suggested by the model simulations" | Canada real GDP, five years, all measures since 2025, tariffs assumed permanent | Down | -1.4% | A2 | Wider scope and longer horizon than the bank estimates; the 0.3 to 1.4 gap is mostly scope, not disagreement |
| The Globe and Mail, Mark Rendell, 2026‑10‑22 [21] | Janice Charette, Canada's chief negotiator: "We're having conversations to see whether or not we can come back to the table for a set of detailed negotiations. We don't know exactly when that's going to happen." Claim: formal negotiations halted since August, no round scheduled, officials still in contact | State of talks, as of 2026-10-22 | Unchanged | No round scheduled | B2 | State of talks, not a rate; major newspaper reporting the chief negotiator, corroborated by CBC on 2026-10-20 ("no substantial engagement at this time", no deal expected before the 2026-11-03 midterms) |
| Canadian Steel Producers Association, Francois Desmarais, via Fastmarkets, 2026‑02‑19 [15] | "We're likely going to have a rocky review over the next six months, maybe even beyond." | CUSMA review path, 2026 | Unchanged | Not stated | B2 | State of talks, not a rate; industry association, consistent with the 2026-07-01 non-renewal [28] |
| Section 338 stacking: Proclamations 11046 to 11048 and 11064, 11065 [9]; Covington [25]; SteelPulse Canada [26] | Original 338 text: duties "shall not apply to articles subject to duties pursuant to section 232"; from 2026-09-15 the motor-vehicle and alcohol duties "shall apply in addition to duties imposed pursuant to section 232"; SteelPulse: "up to 75% combined on some steel structural products" | Duty on 338-listed goods (alcohol, motor vehicles), now | Up for listed goods since 2026-09-15 | 50% on top of 232 for listed goods | A1 (texts), B2 (Covington, written before 09-15), C4 (SteelPulse) | About 338-listed and derivative goods, not primary steel and aluminum; the 338 annex lines are images and were not read, so the SteelPulse steel claim is unconfirmed |
(different metric or horizon from the spread above, so not scored as disagreement)
Public discourse (grade F6: shown, not counted)
Public posts over the past month (105 items across 12 platforms, snapshot of 2026-10-23) lean worse and centre on Stelco, led by a CTV segment asking whether Canada should nationalise steel after the Stelco layoffs; op-eds by Nicolas Lamp, Rita Trichur, Terence Corcoran and Marty Warren argue the same story, and aluminum is almost absent. The one softer reading is a Polymarket price of 57 percent for a US-Canada agreement to lower tariffs, as seen on 2026-10-23 (resolution date of that market not captured). Several video posts claim a new US tariff increase in October; no proclamation for it was found. This price points against the call; if that market resolves before 2027-01-01, read the call against it. The Federal Register was read through 2026-10-23 (no change to the rate on Canadian primary steel or aluminum in October 2026; two paywalled InsideTrade headlines of 10-22 on "adjusted steel, aluminum and copper duties" remain unopened); it is the source to watch, since a proclamation there that changes the rate on Canadian steel or aluminum would move this reading.
Precedent
2018 to 2019: the US put 25 percent on Canadian steel and 10 percent on aluminum from 2018-06-01 and lifted them on 2019-05-20, three days after a joint statement on 2019-05-17, about 11.5 months in all; Canada repealed its surtaxes the same day [29]. Steel exports to the US fell 37.8 percent in June 2018 and aluminum exports "fell by more than half" (StatCan, 2019-08-02 [30]).
The measured effect: "the value of tariffed steel and aluminum exports fell by about 50%, with U.S. importers paying the full cost of tariffs through higher prices", and trade volume "did not fully recover" after removal (Brown, Gu and Tweedle, StatCan, 2025-11-26 [31]).
What it tells a reader now: removal can come fast and inside a wider deal. What it does not: today's rates are double, the episode has run over 19 months against 11.5, and the 2019 removal came with the NAFTA replacement, for which there is no equivalent in sight; the same authors warn "current tariffs are higher, more uncertain and potentially more persistent" [31].
Sources and grades (31)+
Access marks: (fetched) page text read; (extract) search-engine extract only; (paywall) behind a paywall.1. Department of Finance Canada, Budget 2025, Chapter 2, Section 2.2, tabled 2025-11-04 (fetched 2026-10-23). A1 for the wording of the commitment.2. Department of Finance Canada, Budget 2025 home page, "double our overseas exports within a decade" (fetched 2026-10-23). A1 for the wording; a variant of [1], not the tracked measure.3. Statistics Canada customs-basis domestic exports, HS chapters 72, 73 and 76, by destination, via Innovation Canada Trade Data Online, data to August 2026 (released 2026-10-06), retrieved 2026-10-23. A1 for the values. Percentages and shares are computed from them. January to August 2024 is derived (annual 2024 minus September to December 2024), so the 2024 comparison carries about C$0.5M rounding. Values are in current Canadian dollars, so metal prices and the exchange rate move them.4. Statistics Canada, "Canadian international merchandise trade, August 2026", The Daily, 2026-10-06 (fetched). A1. Balance-of-payments basis; the text does not name steel or aluminum.5. Proclamation 11021, "Strengthening Actions Taken to Adjust Imports of Aluminum, Steel, and Copper Into the United States", signed 2026-04-02, effective 2026-04-06, 91 FR 18201 (fetched, full text). A1.6. Proclamation 11032, "Further Adjusting the Tariff Regimes for Imports of Aluminum, Steel, and Copper Into the United States", signed 2026-06-01, effective 2026-06-08, 91 FR 34085 (fetched, full text). A1. Its USMCA content rule applies to Annex I-C derivatives, not to primary metal.7. Proclamation 10947, raising steel and aluminum to 50 percent from 2025-06-04, 90 FR 24199 (fetched). A1.8. Proclamation 10984 clause 13 (reduced-rate program, not below 25 percent, for Canadian and Mexican metal producers supplying US vehicle makers), 90 FR 48451, federalregister.gov ; Proclamation 11045 (aluminum onshoring incentive), 91 FR 46635, federalregister.gov (both fetched). A1. How many Canadian suppliers use the program is unknown.9. Section 338 proclamations: 11046 (alcohol), 11047 (dairy), 11048 (motor vehicles), signed 2026-07-20, in force 2026-08-22 per 11056; 11064 and 11065 (stacking on 232 from 2026-09-15), federalregister.gov and federalregister.gov ; CBP CSMS 69851916, 2026-09-11, content.govdelivery.com (fetched). A1. The product annexes are images and were not read line by line.10. Department of Finance Canada, release of 2026-08-25 ("a 50 per cent tariff on $27.6 billion of Canadian goods"; counter-tariffs on "$27.6 billion in imports"), canada.ca ; complete counter-tariff list (steel and aluminum "from 25 per cent to 50 per cent" from 2026-09-08), canada.ca ; response page (no exemption "for CUSMA-compliant goods"), canada.ca (all fetched). A1. US-side estimates of the 338 coverage (about US$20 billion) were seen only in a search summary and are not used.11. Bank of Canada, Monetary Policy Report, "In focus", 2026-04-29 (fetched). A2.12. Bank of Canada, Monetary Policy Report and rate decision due 2026-10-28; Department of Finance media advisory, Budget 2026 on 2026-11-05, dated 2026-10-20. A1 for the dates.13. Scotiabank Economics, "Duty Calls: Canada & US Trade Report, May 2026", Mitch Villeneuve and John Fanjoy, 2026-07-07 (fetched). B2.14. Canadian Steel Producers Association, via Reuters, 2026-10-16 (extract; Reuters paywall). B2.15. Francois Desmarais (CSPA), via Fastmarkets, 2026-02-19 (fetched). B2.16. Jean Simard, Aluminium Association of Canada, via BNN Bloomberg (Anam Khan), 2026-08-26 (extract). B3 (advocate; supply facts match S&P and Morgan Stanley).17. S&P Global Commodity Insights, "All eyes on 'high stakes' North America trade talks as US aluminum sector begins Q4", via Hellenic Shipping News, 2026-10-09 (quoting a 2026-09-28 view) (fetched; S&P original paywalled). C3.18. TD Securities, Robert Both, "Canada: Trade shock and GDP drag", 2026-08-26, via FXStreet (extract). B2.19. Conference Board of Canada, "Policy Backgrounder: US-Canada Trade War", David K. Young and John Gardner, 2026-09-02 (extract). B3.20. Oxford Economics, "USMCA scenarios: North American trade at a crossroads", 2026-01-23 (extract). B2.21. The Globe and Mail, Mark Rendell, 2026-10-22, "No timeline to resume formal trade talks with U.S., chief negotiator says" (Janice Charette: "We're having conversations to see whether or not we can come back to the table for a set of detailed negotiations. We don't know exactly when that's going to happen."). B2, corroborated by CBC, 2026-10-20.22. Oxford Economics (Stillo and Davenport), via TT News, 2026-09-01 (extract). B2.23. The Globe and Mail, Mark Rendell, 2026-08-30, quoting CIBC and RBC (extract; paywall). B2.24. Parliamentary Budget Officer, "Economic Impact of Recent Canada-U.S. Trade Measures", Tim Scholz, 2026-10-20 (extract). A2.25. Covington, "Section 338 tariffs on Canada take effect", 2026-08 (fetched). B2; accurate to the original text, written before the 2026-09-15 change.26. SteelPulse Canada, free monthly brief, October 2026 (extract). C4.27. Alcoa CFO Molly Beerman, Jefferies conference 2026-09-10, via S&P Global, 2026-09-11 (extract; paywall). B2.28. White and Case, "USMCA 2026 joint review: United States declines to extend agreement", 2026-07 (extract). B2.29. USITC, Trade Shifts 2018 special topic, usitc.gov ; Canada Gazette SOR/2019-143, gazette.gc.ca ; USTR press release 2019-05-17, ustr.gov (all extract). A1.30. Statistics Canada, "Impact of recent tariffs on Canada's merchandise trade", The Daily, 2019-08-02 (extract). A1.31. Brown, Gu and Tweedle, "Lessons from Canadian exporters during the U.S. 2018/2019 steel and aluminum tariffs", Statistics Canada Economic and Social Reports, 2025-11-26 (extract). A2.Read and not cited. The ISED question period note IND-2026-QP-00006 is undated and appears to date from 2025, so its job-loss and tonnage estimates are left out until it is dated. The EDC Global Economic Outlook carries no publication date in the extract (B3 at best), so it is left out until the edition is confirmed. Also left out as unreliable: an aggregator's "-42%" steel figure, a blog line putting the CSPA 60 percent fall in "October", and Desjardins May 2026 tariff-rate figures that could not be checked against the PDF. Algoma's Q3 2026 volume drop came from a power-plant outage, not tariffs, and is not used as tariff evidence.
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