The TRQ system took effect in two stages this summer: on 27 June for non-Free Trade Agreement (FTA) countries and on 1 August for FTA exporters, excluding the US and Mexico. At its core, the policy aims to shield domestic OCTG and linepipe producers from diverted steel flows following US tariffs and to prioritize Canadian-made material for government projects. However, modest quarterly quota volumes—such as just 7,816 tonnes per quarter for OCTG from non-FTA origins and 5,086 tonnes for large-diameter linepipe—and punitive 50% surtaxes on overages create structural tightness in the market. Imports that include Chinese-melted steel face an additional 25% levy, further restricting viable supply options. All quotas are administered on a first-come, first-served basis, with no breakdown by country, supplier or product type.

This structure creates significant risks for suppliers and buyers alike. Since import permits are allocated in real time without clear visibility, it remains extremely difficult for foreign suppliers to control whether their shipments will fall inside or outside quota volumes. Once exhausted, material arriving at Canadian ports becomes subject to the 50% surtax. To manage this uncertainty, many suppliers now issue dual-price offers to Canadian buyers—one reflecting standard landed cost and another including the surcharge in case the shipment is taxed upon arrival. This lack of predictability adds further complexity to procurement strategies and raises overall transaction costs.

In practice, the TRQ regime applies equally to products not manufactured in Canada, meaning domestic buyers may still need to import and pay premiums due to limited local alternatives. As a result, the burden ultimately falls on Canadian buyers, who face higher costs and reduced flexibility. While the system is intended to shield domestic mills, in practice it also extends to non-competing products, amplifying procurement challenges.

Despite these headwinds, OCTG and linepipe prices have held steady in Canada. Stability is expected to persist through year-end, supported by controlled inventory levels, disciplined distributor pricing, and limited import arrivals. Looking ahead, volatility will likely increase as quotas approach exhaustion, particularly during project-heavy quarters when demand spikes. For OCTG, qualification requirements make substitution difficult, leaving end users vulnerable to late-quarter cost surges. In linepipe, large-diameter project tenders could quickly deplete quotas, forcing buyers to turn to domestic mills or face surcharges. This dynamic supports a firmer domestic price floor for OCTG and linepipe.

Overall, the TRQ system tightens Canada’s import channels, strengthens domestic mill pricing power, and raises structural landed costs. While near-term impacts remain muted, the system is set to weigh more heavily in 2026 as sourcing flexibility narrows and procurement risks mount.

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