Algoma Steel assesses viability of US sales in wake of 50% S232 tariffs 

“We are carefully evaluating our options in light of these tariffs,” she added in an email to SMU on Tuesday evening.

Algoma, which is transition from integrated to EAF production, makes hot-rolled coil, cold-rolled coil, and plate. That company expects to have raw steel production capacity of 3.7 million tons per year once that transition is complete.

Market reaction

Market participants have told SMU that Algoma continued to ship to the US market over the summer despite the 50% Section 232 tariff. They said the steelmaker was able to offer competitive prices even once tariff and freight costs were factored in. Some said that implied an fob mill price in the $400s per short ton (st). And that stirred allegations among certain US mills about potential dumping.

But the situation appears to have changed over the last week. Certain US customers of Algoma have said that the steelmaker has told them that it will halt shipments to them in either November or December – and that the Canadian steelmaker had pulled 2026 contracts.

Mounting concerns

Algoma has previously expressed concerns about the impact of 232 tariffs on Canadian steelmakers, including during an earnings call in July. “The steel industry is experiencing unprecedented disruption as the tariff situation has significantly deteriorated since our last quarter,” company CEO Michael Garcia said at the time.

At the SMU Steel Summit in late August, Barry Zekelman, executive chairman and CEO of steel pipe and tube maker Zekelman Industries, said that the combination of US tariffs and high import levels in Canada had left Canadian mills “on their knees.” Zekelman also holds a minority stake in Algoma.

In the face of such challenges, Algoma has sought government support in the form of loans and has increased its credit facility from $300 million USD to $375 million USD. (Editor’s note: Think of that as the business equivalent of increasing the credit limit on your credit card.)

Background

President Donald Trump re-imposed Section 232 tariffs of 25% on US allies, including Canada, in March. He then doubled the tariff to 50% in June. Canada – the largest source of foreign steel to the US market – had been exempt from Section 232 since 2019. The Trump administration has also extended Section 232 to cover downstream products.

The Canadian Steel Producers Association (CSPA) spoke out against the US’s addition of more than 400 products to the list of derivative products covered by the 50% Section 232 tariffs on steel and aluminum in August.

Some market participants think Section 232 tariffs could be relaxed against Canada ahead of USMCA negotiations next summer. That’s what happened in 2019 before the initial USMCA deal went into place in 2020. But other industry sources aren’t so sure given the heated rhetoric between the Trump administration and Canadian leaders.