Ottawa's new $100 million steel freight rebate covers half the rail or marine freight costs for Canadian-origin steel shipped domestically.
Transportation Minister Steven MacKinnon announced the program this week, saying it's meant to help domestic steel producers compete as US tariffs squeeze their traditional export market.
"Canadian businesses want to use more Canadian materials, and our government wants to support that," MacKinnon said.
Applications opened this week. The rebate is capped at $50 million per recipient and runs for up to a year or until funding runs out. It builds on a plan Prime Minister Mark Carney announced on November 26, 2025, when Ottawa committed to working with Canada's two major railways to cut interprovincial freight rates for steel and lumber by 50%, starting spring 2026.
For commercial lines underwriters, the program does more than subsidize shipping. It gives manufacturers a financial incentive to shift steel sourcing onto domestic rail and marine routes, and onto fewer domestic mills. Both changes affect risk in ways worth flagging to clients now.
Marine and cargo underwriters have been watching this kind of shift since tariffs started reshaping North American trade patterns generally.
Mike Nukk, head of marine at specialty MGA Rokstone, has described the dynamic: "If manufacturing investment in the US, Canada and Mexico continues, we may see fewer ocean imports and more cross-border rail and trucking shipments."
Traditional marine cargo policies are built around ocean transit, port storage and inland delivery as one chain. Moving more cargo onto purely domestic rail and marine routes changes the perils underwriters need to price for: less port congestion and customs delay exposure, more exposure tied to rail yard security, transit distance, and cargo concentration on fewer routes and carriers. This mirrors a broader pattern already showing up as tariffs push companies to diversify supply chains more generally.
There's a second exposure building here. As Ottawa pushes manufacturers toward domestic steel, it's also pushing them toward fewer, larger suppliers instead of a globally diversified base. That makes contingent business interruption coverage, which pays out when a named supplier's facility is disrupted, more consequential.
If a manufacturer consolidates its steel sourcing around one or two Canadian mills to capture the rebate, a fire, strike, or equipment failure at either mill becomes a bigger exposure for every downstream policyholder relying on it. Brokers should revisit named-supplier schedules on CBI coverage with this in mind.
This concentration risk isn't hypothetical. In August 2024, Canadian National Railway and Canadian Pacific Kansas City, Canada's only two Class I freight railways, locked out a combined 9,300 workers simultaneously for the first time in Canadian history, halting freight rail nationwide until a back-to-work order restored service within days.
With more steel volume now moving onto exactly those two networks, a repeat disruption would touch a larger share of the country's steel supply chain than it would have before.
One important caveat: tariffs themselves, and the freight costs they've indirectly driven up, aren't what CBI or standard property policies are built to cover.
That coverage is typically triggered by physical loss or damage to a named location, not by cost increases or government trade actions, which are commonly excluded outright. Brokers should be clear with manufacturing clients that this rebate, and the broader tariff environment behind it, is a sourcing and underwriting consideration, not a claims trigger on its own.
What's worth flagging is the supply chain restructuring the rebate encourages, not the tariffs or subsidy themselves.
