With almost half of their customers in the United States, the head of Algoma Steel in Sault Ste. Marie says 25 per cent tariffs on exports to the U.S. would be a major blow to their operations.
“If these tariffs do get implemented … you know, we will have to slow down,” Algoma CEO Michael Garcia said.
“We can’t just keep making steel if nobody is buying.”
U.S. President Donald Trump has threatened to impose the tariffs beginning in March. Garcia said the impact on their operations would be severe.
“Our U.S. customers make up a significant and important part of our business,” Garcia told CTV News.
“Almost half of our volume goes to the United States … It may not make sense for us to continue to service those customers for as long as the tariffs are in place.”
The company, which employs about 2,700 people, is looking to expand its sales in Canada and find efficiencies to cut costs. But losing customers south of the border would be devastating to their operations, Garcia said.
“We’ve had conversations with all of our customers on both sides of the border, and all of our customers are concerned,” he said.
Canadian steel no threat to U.S.
“There’s never a good time to fundamentally disrupt a supply chain that has been set up over several decades ... But certainly, we’ll work through this and have a lot of discussions around what supply chains look like if, fundamentally, the U.S. takes a different approach to trade.”
Garcia agrees that steel manufacturing in the U.S. has been damaged by unfair competition, but he said Canada faces the same challenges as the U.S.
Canada exports about six million tons of steel south of the border, Garcia said, compared to the 80-90 million tons the U.S. produces.
“I think the United States has legitimate concerns about the way that much of their manufacturing base and steel industry has been damaged by foreign, unfairly traded steel,” he said.
“But if there’s any threat to jobs in the U.S. and the vibrancy of the U.S. steel industry, it’s not coming from six million tons coming from Canada, or the 800,000 or 900,000 tons that Algoma Steel shipped to US customers.”
Garcia said instead of putting up trade barriers, the two countries should put up a common front in the global steel trade.
“The best way forward, I believe, is to work together to create a vibrant North American-based steel-making industry that services customers all over North America,” he said.
Canada, the U.S. and Mexico should work together to ensure the market isn’t flooded with cheaper foreign steel that threatens jobs.
“I can tell you that Algoma Steel or the Canadian steel industry has never displaced thousands of U.S. steel-making jobs,” he said.
“Canada is not the threat to the U.S. steel industry or the U.S. manufacturing sector.”
Going down the wrong path
If the tariffs are imposed in March, Garcia said U.S. lawmakers will realize within a few months that they are “going down the wrong path.”
Garcia said he’s hopeful that cooler heads will prevail and a way will be found to prevent the tariffs being imposed.
“There’s still three to four weeks, so it’s a dynamic situation,” he said.
“Speed is of the essence, because if these tariffs do get implemented, that starts to impact us immediately. And so we’ve made it clear to the government that there’s an important role for them to play. And … those actions need to start happening immediately if these tariffs do get (put) in place.”
Those actions include counter-tariffs on U.S. and all foreign steel, and revenue from the tariffs should be used to offset the damage done to Algoma and other Canadian steel producers, Garcia said.
“Take that money and support the workers and the companies that are most impacted by these tariffs in the steel and aluminum industry,” he said.
“Those would be the first steps. I think, reasonable and proportional steps that help the U.S understand that, you know, this type of … trade philosophy with Canada is not in the best interest of the U.S.”
“I believe a free trade posture in North America serves both the US and Canada most effectively,” Garcia added.
“If you go away from free trade, and all three countries in North America start to put up barriers, that only hurts the citizens of all three of these countries.”
