Final Thoughts: Canada and S232 rocket back into the news—and Steel Summit!

In the meantime, I think it’s fair to say coverage in the mainstream business press, SMU reporting, and what I’ve heard from industry contacts is coalescing around some key points. As far as steel goes, the deal is expected to see Section 232 tariffs cut from 50% to 25%. But it probably won’t be across the board. There could be different rates for downstream products, for example.

Also, quotas are likely to play a big role. I don’t know whether there will be a single quota volume. Or separate volumes by product category. The upshot? Even if tariffs on Canadian steel go down a lot, import volumes probably won’t return to what they had been.

Trade talk whiplash

To say developments over the last week were unexpected by most in the industry would be an understatement. As recently as a few weeks ago, even high-ranking US officials might have told you there were no talks with Canada happening.

And I was pretty sure that was an accurate assessment. Because soon after talks about renewing the US-Mexico-Canada Agreement (USMCA) collapsed, we saw steel associations and steelmakers in Canada (and Mexico) decide against speaking at Steel Summit.

The consensus at the time had been that Mexico would reach a deal with the US first, and then Canada would be forced to come to the table. In contrast, a deal with Mexico, while more comprehensive, will take longer.

I started hearing, as I’m sure some of you did, about potentially big trade news regarding Canada only a week or so ago. US-Canada trade talks went from being a non-issue to a hot rumor to actual news in what seemed to be record time—even by the standards of Trump 2.0.

The catalyst for renewed talks was Section 338, another previously obscure US trade tool. It could have been used to hit certain Canadian imports with tariffs of 50% just after midnight last Wednesday.

Shoot first, ask questions later?

Markets reacted immediately. Shares of domestic steelmakers plunged along with steel futures. Some of those declines might be merited. But a big part of me wonders whether there was more than a little “shoot now, ask questions later” in those trades.

Or perhaps it was an assumption the market would see a repeat of May 2019, when 25% Section 232 tariffs imposed on Canada and Mexico were removed before USMCA went into force in 2020.

The 2019 template

I know some people have been worried about a repeat of 2019 almost since the day Section 232 tariffs were re-imposed on Canada and Mexico last March. After all, Canada is the biggest steel exporter to the US. (That said, South Korea is challenging Canada for that title this year). It can ship at lead times on par with domestic mills. And it plays a bigger role in the Great Lakes/Midwest, where the market has been particularly tight. (Of course, Canada plays a much, much bigger role in the US primary aluminum market, supplying approximately 60% of domestic demand.)

But this doesn’t look like a repeat of 2019, when the US dropped Section 232 tariffs against Canada and Mexico ahead of the USMCA going into effect in 2020.

Let’s rewind to what happened back then. US prices averaged $625/st on May 14, 2019, according to SMU pricing archives. They fell to an average of $605/st the next week, when the reduction took effect. And a month later, they were at $520/st—a precipitous drop (nearly 17%) in such a short time by the standards of that time.

Why this time might be different

Let’s start with quotas. And let’s take some numbers to put Canadian imports in context.

Canada shipped an average of 6.82 million st (6.19 million metric tons) to the US between 2021 and 2024, according to Commerce Department figures. (I’m using that as a base point because the pandemic made 2020 an outlier.) In 2025, following the re-imposition of Section 232 tariffs, Canada sent only 4.53 million st (4.11 million mt) to the US, a nearly 34% decline.

Assuming there are quotas in place, I’d be surprised if imports from Canada shot above six million tons a year again.

Sheet ain’t cheap in Canada either

Then there is the matter of pricing. The Canadian market has been mirroring the US market recently. The trend poses a sharp contrast to much of the last year, when Canadian prices practically disconnected from US prices. (Remember back when certain Canadian steelmakers could ship through a 50% S232 tariff?)

Traditionally, of course, US and Canadian steel prices tended to be at roughly equivalent levels once currency differences were taken into account.

Now, in both Canada and the US, prices are high, and supplies are tight. In Canada, as in the US, import controls are stricter than they used to be—even if they’re still not as strict as Washington wants. And that was before Algoma Steel was hit with an unplanned outage, which further tightened the market.

SMU doesn’t officially assess Canadian HR prices. But some of you have told me spot HR in Canada (if you can find it) is about $1,100 per short ton. (And that’s in USD.) I’ve also heard Canada has seen the kind of rapid-fire, triple-digit price hikes that used to characterize the US spot market before Nucor’s CSP hit the scene. In any case, add 25% to that $1,100/st, and you’re looking at $1,375/st—not exactly a competitive price.

The Trump factor

Section 338, like Section 232, can be invoked by the president. So will President Trump like the deal with Canada? Will he scrap it at the last minute? Let’s just say I’m not going to make a wager on this one.

Be a part of history at Steel Summit!

What I will wager is this: There has rarely been a better time to attend the SMU Steel Summit and AMU Aluminum Summit. (Two conferences, one ticket!)

Both are on August 24-26 at the Georgia International Convention Center in Atlanta. And it’s not too late to secure your spot. You can register for Steel Summit here and for Aluminum Summit here.

By the way, this is hardly the first time we’ve had breaking news to discuss at our events. In fact, we’ve had breaking news happen rather regularly at our events.

In 2022, we held Steel Summit just ahead of United Steelworkers (USW) contracts expiring with Cleveland-Cliffs and U.S. Steel. Guess what’s happening again this year? That’s right. USW contracts with both steelmakers are set to expire on Sept. 1.

In 2023, Summit came just days after U.S. Steel confirmed it was for sale, and Cleveland-Cliffs said it was among the bidders.

And in 2025, at Tampa Steel, as we were discussing trade policy on stage with Wiley trade attorney Tim Brightbill, news broke that the US would be hitting Canada and Mexico with 25% tariffs.

So, if you’re already registered, we can’t wait to see you on Monday in Atlanta. And if you haven’t registered yet, what are you waiting for? You might just see a little bit of history!