Algoma Steel has temporarily halted all exports south of the border as the dust settles on the latest round of tariffs and counter-tariffs.
At 12:01 a.m. today, the U.S. went ahead with a promised 25 per cent tariff on all steel and aluminum imports. The Canadian government responded Wednesday with its own 25 per cent levy on American-made steel and aluminum, which takes effect Thursday.
Michael Garcia, the CEO of Algoma Steel, was a guest on the latest episode of our Inside the Village podcast. He spoke at length about how the escalating trade war could impact Sault Ste. Marie’s largest employer, both immediately and in the long-term.
“We are watching every dollar very closely,” Garcia said. “The message we're sending to our employees right now is: We have to focus on what we can control. We can't control what President Trump decides to do with tariffs, but we can control safely making steel, focusing on our production, focusing on executing our manufacturing plan, making the steel that our customers have ordered, making it as cheaply as possible, and examining every dollar that we're spending.”
When the U.S. implements a tariff, the cost falls on what is known as the importer of record. In Algoma’s case, the company — not the U.S. customer — is the importer of record.
“What that means is immediately, all of our business into the U.S. — whether we're making 10 per cent profit on it or 2 per cent or 25 per cent — we have to pay a 25 per cent tariff,” Garcia said. “If the price isn't high enough, it can immediately make all those orders underwater for us because we just don't have any leftover profit or margin to pay the tariff with. That’s the most serious threat to our business short-term.”
WATCH: Trump's tariffs will unleash 'a lot of pain,' says Algoma Steel CEO
Garcia said his team is already talking to U.S. customers about potentially bumping prices to help “share the pain.”
“Some customers, because they have a long relationship with us and they know that we're a great supplier to them — and they may also have a view that the tariffs are not going to be long-term — they're willing to pay some of that temporary pain,” he said. “We've had those types of discussions.”
Algoma is also looking to expand its sales to Canadian customers, Garcia said.
“Half of our customers are already Canadian, so we have discussions with them about growing,” he said.
“Can we do more business with them? Are there Canadian customers that we don't serve that we can talk to and maybe start to do business with — especially if they're buying foreign steel. Everybody right now, I think in the current environment, should be eager to buy Canadian. If there's Canadian companies out there that are buying steel from the U.S. or China or anywhere else in the world, I sure hope they give us a call. And if they don't give us a call, we're probably going to be calling them because we want to sell steel to them.”
You can watch Garcia's full interview HERE.
Hosted by Scott Sexsmith and Michael Friscolanti, the Editor-in-Chief of Village Media, Inside the Village is a news and current affairs podcast that provides a weekly window into some of the best local journalism from across our chain of Ontario newsrooms. Produced by Derek Turner, the program also explores bigger-picture issues that impact people across the province.
Every episode can be found HERE. If you prefer the audio version, it is available wherever you find your favourite podcasts.
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