Published on December 5, 2025
Every few years, a Canadian politician stands in front of a flag and says we should buy more Canadian stuff. The crowd cheers. The economists wince. And then everyone goes home and orders something from Amazon.
This time it's different. Kind of.
Budget 2025 requires that all federal contracts over $25 million prioritize Canadian materials, specifically steel and lumber [1]. The government estimates this applies to roughly $70 billion in public investment over the coming years [1]. That's not a bumper sticker. That's a procurement mandate with real money behind it.
The idea is straightforward: when the government builds a bridge, a highway, a military base, or a federal building, the steel and lumber should come from Canadian mills and forests. Canadian taxpayers pay for the project. Canadian workers should benefit from it.
Hard to argue with the principle. Easier to argue with the price tag.
The Economic Logic
Buy Canadian is a domestic procurement preference. Many countries have them. The United States has "Buy American" provisions that have existed in various forms since 1933 [2]. The EU has procurement rules that favour European suppliers. Japan, South Korea, and India all have domestic content requirements for public spending.
The economic theory supporting these policies is about multiplier effects. When a government buys Canadian steel, the money goes to a Canadian steel mill, which pays Canadian workers, who spend their wages at Canadian stores, which employ more Canadians. Each dollar circulates through the domestic economy multiple times.
Research suggests that domestic procurement recirculates money at 2-4 times the rate of imported procurement [3]. A dollar spent on Canadian steel generates $2-4 in domestic economic activity. A dollar spent on imported steel generates the same economic activity, just in another country.
For a government spending $70 billion, the difference between domestic and imported materials could mean tens of billions in additional Canadian economic activity. That's jobs in Hamilton, Sault Ste. Marie, northern BC, and forestry communities across the country.
The Price Problem
Canadian steel costs more than imported alternatives. How much more depends on the product and the market, but the premium is typically 5-15% over competitive imports, and sometimes more for specialty products [4].
If Buy Canadian adds 10% to material costs on $70 billion in projects, that's $7 billion in additional spending. If it's 15%, that's $10.5 billion. Those extra billions come from the same deficit that's already at $78.3 billion.
The government's position: the extra cost is offset by the economic multiplier effects. Pay 10% more for steel, but get 2-4x more economic activity from every dollar. Net benefit to Canada.
The counterargument: those extra billions could have been spent on more projects. If you save 10% on materials, you can build more bridges, more housing, more infrastructure. The question isn't just where the money goes. It's how much stuff you build with it.
This is the eternal tension in domestic procurement: you get more domestic economic benefit per dollar but fewer projects per budget. There's no free lunch. The lunch is just being served at a Canadian restaurant with Canadian prices.
The Capacity Question
There's a practical problem that policy documents tend to gloss over: can Canadian industry actually supply what a $70 billion procurement mandate demands?
Canada's steel industry produces roughly 12-14 million tonnes per year [5]. That's a significant amount, but the industry has been dealing with global overcapacity, import pressure, and cyclical demand for years. Suddenly requiring Canadian steel for all major federal projects creates a demand spike that existing capacity may not be able to meet without expansion.
If demand exceeds supply, prices go up further. Steel mills raise prices because they can. The Buy Canadian mandate, intended to support Canadian industry, becomes a windfall for Canadian steel companies at the expense of Canadian taxpayers.
The lumber situation is similar. Canada's forestry industry has been under pressure from beetle infestations, wildfires, and US softwood lumber tariffs [6]. Production capacity isn't infinite. Mandating Canadian lumber for federal projects helps forestry communities but potentially tightens supply for private sector builders, pushing up housing construction costs.
The steel and lumber protections that Carney announced in November 2025 add another layer: import quotas from non-FTA countries cut to 20% of 2024 levels, and a 25% global surtax on imported steel derivative products [7]. This protects domestic producers but reduces the competitive pressure that keeps prices in check.
The Workers
For steelworkers in Hamilton and lumber workers in northern BC, Buy Canadian isn't abstract economic theory. It's job security.
Canada's steel sector directly employs roughly 23,000 workers, with another 100,000 in related industries [8]. The forestry sector employs about 200,000 directly and supports hundreds of communities where the mill is the primary employer [9].
These jobs tend to be well-paying, unionized, and located in communities with limited alternative employment. When a steel mill closes or a lumber operation cuts shifts, the ripple effects are devastating. Young people leave. Tax revenues drop. Schools and hospitals lose funding.
Buy Canadian keeps those jobs alive by guaranteeing a floor of demand from the largest single buyer in the country: the federal government. That guarantee has value beyond the immediate economic activity. It gives companies confidence to invest in equipment, technology, and workforce training. It gives communities stability to plan for the future.
The workers' argument is compelling: if taxpayers are funding a project, taxpayers should get the jobs. It's the same logic that makes people support local businesses over big box stores. The economics are more expensive per unit, but the community benefits are harder to measure and easier to feel.
What Other Countries Do
Canada isn't inventing anything new. It's catching up.
The United States' Buy American Act requires that federal agencies purchase domestic materials for public projects. The Biden administration's Bipartisan Infrastructure Law strengthened these requirements in 2021, requiring that iron, steel, manufactured products, and construction materials used in federally funded infrastructure projects be produced in the US [10].
The EU's procurement rules give preference to European suppliers for public contracts, with specific provisions for strategic industries like defence, energy, and telecommunications.
China's domestic procurement preferences are among the most aggressive in the world, requiring Chinese materials, technology, and labour for virtually all government projects.
Canada's version is actually more modest than most. The $25 million threshold means smaller projects can still use imported materials. The focus on steel and lumber, rather than all materials, limits the scope. And the mandate applies to federal projects only, not provincial or municipal spending.
If anything, the criticism from an economic nationalist perspective would be that Canada isn't going far enough. The counter-criticism from a free-trade perspective would be that any procurement preference creates inefficiency.
Both are correct, which is economics in a nutshell.
The Bottom Line
Buy Canadian is the kind of policy that feels right and costs more than people expect. It protects real jobs in real communities. It keeps taxpayer money circulating in the domestic economy. It builds industrial capacity that's strategically valuable in an era of trade uncertainty.
It also raises the cost of public infrastructure, potentially limits how many projects the government can fund, and creates market distortions that benefit steel and lumber producers at the expense of other taxpayers.
The trade-off is real. Canadian steel costs more than imported steel. Canadian lumber isn't always the cheapest option. The premium that patriotism adds to every project eventually comes out of someone's budget: the government's, the taxpayer's, or the next generation's.
Whether that premium is worth paying depends on what you value. If you value keeping Canadian industrial communities alive and building national supply chain resilience, the answer is probably yes. If you value maximizing the number of projects per budget dollar, the answer is probably no.
Most Canadians, asked directly, would say they support buying Canadian. Most Canadians, asked to pay more for it, would hesitate.
That hesitation is the entire policy debate, compressed into a single honest moment.
References
[1] Prime Minister of Canada. "Budget 2025 Measures: Buy Canadian." November 10, 2025.
[2] United States Government Accountability Office. "Buy American Act: History and Implementation." 2019.
[3] Civic Economics. "The Local Premium: Economic Impact of Local Procurement." 2012.
[4] Canadian Steel Producers Association. "Steel Price Benchmarking: Canada vs Global." 2025.
[5] World Steel Association. "Steel Statistical Yearbook: Canada." 2025.
[6] Natural Resources Canada. "State of Canada's Forests Annual Report." 2025.
[7] Prime Minister of Canada. "New Measures to Protect Steel and Lumber Industries." November 26, 2025.
[8] Canadian Steel Producers Association. "Economic Impact of the Canadian Steel Industry." 2024.
[9] Natural Resources Canada. "Forestry Sector Employment Statistics." 2025.
[10] White House. "Biden-Harris Administration Buy American Rules." 2021.