Federal government announces new $1B loan program for steel, aluminum businesses hit by Trump tariffs

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OTTAWA - The federal government is launching a new $1 billion loan program for steel, aluminum and copper businesses impacted by U.S. President Donald Trump’s tariffs.

Industry Minister Mélanie Joly and minister responsible for the Federal Economic Development Agency for Southern Ontario Evan Solomon made the announcement in Vars, Ont. on Monday morning.

“The new measures announced today will protect workers and ensure companies have the tools and financing they need to keep operating, growing, and building Canada’s strength at home,” Joly said in a statement.

The program will be created under the Business Development Bank of Canada and will provide “financing at favourable terms” to help businesses “address immediate pressures” and “adapt to future market conditions.”

The funding was not part of last week’s spring economic update.

Speaking to reporters, Joly said three-year loans will be provided for between $2 million and up to $50 million with zero interest during the first year. Low interest rates will then be applied in the subsequent years with no repayment required for the entire three-year loan period.

Joly pointed to the Trump administration’s adjustment to Section 232 tariffs, which imposed 50 per cent duties on the full customs value of items made entirely or almost made entirely of steel, aluminum and copper, and 25 per cent levies on derivative items, as a reason for the initiative. Those tariffs came into effect on April 6.

Canada has imposed a 25 per cent tariff on a list of U.S. steel product imports worth $12.6 billion and aluminum products worth $3 billion in response to Trump’s tariffs. The federal government has also slapped a 25 per cent surtax on specific Chinese steel and aluminum products and quota restrictions to combat unfair trade practices and overcapacity as a way to help those industries.

‘I don’t know’ how long tariffs will be in place: Joly

The U.S. tariffs on steel and aluminum have been in effect for more than a year.

Asked by reporters if she thinks Trump’s tariffs will be in place “forever,” Joly said “I don’t know.”

“This is not up to us to answer that question because these decisions will be taken out of our border,” Joly added. “Meanwhile, we just don’t sit idle waiting for things to happen. We act.”

Conservative-Manitoba MP Raquel Dancho criticized the announcement on Monday and called the loan program a “band-aid solution.”

“Today is an admission that there is no trade deal on the horizon, despite promising a year ago to Canadians that the Carney Liberals were the best ones to deliver a deal. Clearly, that has not to come to fruition,” Dancho said.

Will loans have oversight?

During the COVID-19 pandemic, the federal government offered interest-free and partially forgivable loans of up to $60,000 through the Canada Emergency Business Account (CEBA) program.

In the years after those loans were issued, the program faced criticism with the federal auditor general saying it lacked control over contract spending. In December 2024, the auditor general found $3.5 billion in CEBA loans were paid to roughly 77,000 ineligible applicants.

Asked whether there will be oversight in place for the new steel and aluminum loans, Joly would not specify on details but said the federal government will “make sure, ultimately, that this money goes into the right hands.”

The government also announced an additional $500 million to the already-existing Regional Tariff Response Initiative to help small and medium enterprises impacted by tariffs.

Also speaking to reporters, Solomon insisted there will be “lots of follow up” for the funding that will be made available through that program.