Algoma Steel braces for more trade pain from the United States

Officials with Algoma Steel are waiting for the other shoe to drop, with U.S. tariffs on steel and aluminum next week.

With sweeping tariffs imposed on Canadian goods by the United States, officials in Sault Ste. Marie are likening it to the first shoe dropping.

In a week’s time, the bad situation could get worse for Algoma Steel, as America is set to slap 25 per cent tariffs on imports of steel and aluminum.

That’s a major challenge for Algoma since the majority of its business is south of the border. But for now, the company is still fulfilling contracts in the United States.

“What we have seen since Jan. 20 is a 35 per cent increase in plate pricing in the plate price in the U.S., and a 25 to 30 per cent increase in coil pricing,” said Algoma CEO Michael Garcia.

“So that’s giving us the opportunity, at least in the short term, to continue to ship into the U.S. and ad cover our tariff obligations, so to speak.”

The next hurdle for the Canadian steelmaker comes March 12, when America plans to implement 25-per cent tariffs on steel and aluminum.

That would be a disaster for Algoma, Garcia said.

“Assuming the steel price remains where it is now, it would immediately put any business that we’re doing in the U.S. under water,” he said.

“(It) wouldn’t make sense for us to continue to ship to the U.S. if we believe that a 50 per cent tariff was going to be in place for any significant amount of time.”

Algoma has already laid off roughly 20 employees due to precautionary cost-cutting, though Garcia said some have returned to work.

He calls it a dynamic situation and that the possibility of pink slips is a disruption for his workers.

Despite media reports the tariffs could be short-lived, Garcia isn’t getting his hopes up.

“I’m not sure how amenable or how flexible the government in the US is going to be,” he said.

“(At least) until they start to realize that these tariffs aren’t having the effect that they were hoping they would have.”