Canadian steelmakers need to focus on domestic market as tariffs lock them out of U.S.: Algoma CEO

Rolled coils of steel in the yard at Algoma Steel Inc. along the St. Marys River in Sault Ste. Marie, Ont. Photo by Nick Iwanyshyn/The Canadian Press files

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Canadian steelmakers might need to pivot their focus on the domestic industry as steep tariffs lock them out of the United States market, according to the chief executive of Canada’s second-largest steel producer.

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“We’ll have little to no business in the U.S. if the 50 per cent tariff continues,” Algoma Steel Inc. CEO Michael Garcia said in a recent interview with the Financial Post’s Larysa Harapyn. “Once the full effect of (the tariffs) plays out, it will effectively lock out Algoma and frankly other Canadian steel producers from the U.S. market.”

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Garcia said not having economic access to customers in the U.S. would be a big challenge for Canadian steelmakers because that’s where most of their product goes. “There really are no practical foreign markets for Canadian steel other than the U.S. market,” he said.

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But entering the domestic market comes with its own obstacles. Garcia said roughly two-thirds of the country’s steel is supplied by foreign companies, so Canadian steelmakers would face a lot of competition.

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“Much of that steel is unfairly traded and dumped into the Canadian market,” he said. “That’s accelerated now that the U.S. has 50 per cent tariffs on all foreign steel coming into the U.S.”

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Garcia said another problem is that most of the steel produced domestically is coil, and steelmakers would need to diversify their product to appeal to Canadian businesses.

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“That requires investment, that requires time,” he said. “There has to be an environment where Canadian steelmakers are making the … type of steel that is consumed in Canada and have a free-trade environment to win that business.”

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The federal government said last month that it is setting aside $1 billion from its Strategic Innovation Fund to help Canadian steel companies advance new projects. But Garcia said there isn’t an uptick in demand for those projects yet.

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“Our challenge is to bridge the company into the future,” he said. “Make sure we’re making the right type of products, that are demanded by Canadian customers, and be there when that demand appears.”

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