Canada's steel industry says Trump's next tariff hike threatens 'mass disruption' to supply chain
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United States President Donald Trump has announced plans to jack up tariffs on steel and aluminum to 50 per cent on June 4 in a move that will further inflame trade tensions.
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Canadian steel and aluminum producers have faced 25 per cent U.S. tariffs since early March, even though Trump has granted pauses and scaled back some of his administration's other tariffs.
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The consequences of the steel and aluminum tariffs include reduced industry profits and higher prices for consumers on a wide range of goods, which then reduces demand and further erodes profits. The tariffs have already led to layoffs at plants throughout Canada.
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'Steel tariffs at this level will create mass disruption and negative consequences across our highly integrated steel supply chains and customers on both sides of the border,' the Canadian Steel Producers Association (CSPA) said in a statement on Saturday.
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Trump made the announcement at a steel plant near Pittsburgh, saying no one would be able 'to steal your industry.'
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The announcement, which also affects aluminum, comes at a time when global steel prices have been low, which had softened the blow of the tariffs on U.S. buyers of steel.
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Still, the impact has been pronounced in Canada. Sault Ste. Marie, Ont.-based Algoma Steel Inc. said in its first-quarter earnings report that it paid $10.5 million in tariffs after they had been in place for just two weeks.
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An updated figure has not been released since then, but chief executive Michael Garcia earlier this month said 60 per cent of Algoma's revenue has traditionally come from the U.S., and the company was making changes to reduce that to closer to 50 per cent.
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'The Canadian market has become increasingly challenging, as foreign steel that would have historically gone to the U.S. is now being redirected to Canada due to U.S. tariffs,' he said at the time. 'This has created an oversupply … across multiple product segments, driving down prices and compressing margins.'
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Algoma's share price has declined 48.9 per cent since January, and 59 per cent since November, to $4.94 per share. That has reduced its total market capitalization to $518 million.
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The company is just completing an $850-million project to switch its steelmaking process to an electric arc furnace, which will vastly reduce its greenhouse gas emissions while also changing its business structure by allowing it to use scrap metal.
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