Canadian steelmakers may need to overhaul their operations as steep U.S. tariffs threaten to block access to their largest export market, says Algoma Steel Inc. chief executive Michael Garcia. He made the comments to Financial Post last week.
“We’ll have little to no business in the U.S. if the 50 per cent tariff continues,” Garcia told the Financial Post’s Larysa Harapyn. “Once the full effect of (the tariffs) plays out, it will effectively lock out Algoma and frankly other Canadian steel producers from the U.S. market.”
Algoma, based in Sault Ste. Marie, Ont., is Canada’s only plate steel producer. While it still has contractual obligations in the United States, Garcia said those will wind down within the year if the tariff remains. “There really are no practical foreign markets for Canadian steel other than the U.S. market,” he said.
The company has asked Ottawa for a $500-million enterprise tariff loan facility, not due to immediate liquidity concerns, but to safeguard operations as it adjusts to the loss of U.S. sales and navigates an uncertain Canadian market.
Financial Post writes that if U.S. access remains blocked, Garcia said producers will have to pivot to the domestic market, which in recent years has been supplied about two-thirds by foreign steel. “Much of that steel is unfairly traded and dumped into the Canadian market,” he said. “That’s accelerated now that the U.S. has 50 per cent tariffs on all foreign steel coming into the U.S.”
Algoma sees potential in infrastructure and defence projects under Prime Minister Mark Carney’s nation-building agenda, but Garcia noted that significant demand from those projects has yet to materialize. “Our challenge is to bridge the company into the future,” he said. “Make sure we’re making the right type of products, that are demanded by Canadian customers, and be there when that demand appears.”
Meeting domestic needs would require investment and time, Garcia said, with steelmakers shifting away from coil production and toward products such as plates for shipbuilding, energy, and defence. “There has to be an environment where Canadian steelmakers are making the … type of steel that is consumed in Canada and have a free-trade environment to win that business.”
Algoma has already signed agreements with shipbuilders, including B.C.-based Seaspan, and is positioning itself to supply marine plates if domestic shipbuilding expands. Garcia said the company has a history in the sector and is ready to rejoin the supply chain if projects are awarded and dormant shipyards return to activity.
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