Steel moving south across the Canada–U.S. border was once a central part of Algoma Steel’s business. That flow has narrowed sharply. In results released October 28, 2026, the Sault Ste. Marie manufacturer reported that U.S.-bound deliveries accounted for just 24% of third-quarter steel shipments, compared with 50% a year earlier.
The company links the change to Washington’s 50% steel tariffs, which have made its traditional export market far harder to serve. Yet tariffs are only part of the picture. Algoma is also rebuilding the way it makes steel, managing production setbacks and turning toward Canadian buyers. Its latest figures show how trade policy, industrial investment and local jobs are becoming inseparable.
An Export Market That Shrunk in a Year
A year ago, half of Algoma Steel’s third-quarter shipments went to U.S. customers. In the three months ended September 30, 2026, that share was 24%, a drop of 26 percentage points. It reflects the weakening of a cross-border business long central to the Sault Ste. Marie operation.
The underlying tonnage makes the retreat starker. Algoma shipped 144,527 tons of steel to all destinations in the quarter, down from 419,173 a year earlier. Applying its reported U.S. shares to those totals suggests approximately 35,000 tons went south this quarter, versus roughly 210,000 a year before. Those are estimates based on rounded percentages, not separately reported counts. Importantly, the overall decline cannot be blamed on tariffs alone: the switch to electric-arc furnaces and an August power outage also reduced output. Still, the shrinking American share shows a company deliberately redirecting business rather than simply waiting for its old market to fully return.
Trump’s 50% Tariffs Changed the Economics of Cross-Border Steel
The tariff barrier has a timeline. Washington imposed Section 232 steel duties in March 2025 and raised the principal rate from 25% to 50% on June 4. The Trump administration framed the measures as protecting U.S. industrial capacity and national security. For Canadian mills, the policy made familiar American orders more expensive.
The 50% rate remained in force on covered Canadian steel during Algoma’s third quarter of 2026. U.S. rules also evolved to encompass additional downstream and derivative products, although rates and exceptions differ by product. That distinction matters: a steel plate crossing the border can face a different calculation from a finished manufactured item containing steel. Algoma says the measures have severely restricted access to American buyers. The consequences extend beyond tariff invoices. Customers considering a long-term supply agreement must weigh uncertainty over duties, pricing and delivery commitments, giving Canadian producers a reason to develop markets closer to home.
Lower Tariff Bills Mask a Costly Retreat
Lower tariff expenses might sound like relief, but Algoma’s numbers tell a more complicated story. The company recorded C$18.1 million in direct tariff costs during the third quarter, down from C$89.7 million in the same quarter of 2025. Its explanation was not a reduction in the U.S. tariff rate. Rather, it deliberately shipped less steel across the border.
For the first nine months of 2026, direct tariff costs totalled C$64.2 million, compared with C$164.3 million a year earlier. The company says it generally has not been able to pass these costs on to customers. Imagine a longstanding U.S. purchaser considering an Ontario supplier: even if the steel remains suitable, a steep duty changes the economics of an order. Pulling back reduces the tariff bill but can also sacrifice sales and established customer relationships. In that sense, smaller duty payments are evidence of lost market access, not necessarily renewed financial health.
Revenue Has Halved Even as Losses Narrow
The wider financial picture shows why Algoma’s position remains difficult. Third-quarter revenue fell to C$249.4 million from C$523.9 million a year earlier. The manufacturer reported a net loss of C$129.6 million, compared with C$485.1 million in the previous-year quarter. That narrower loss needs context: the 2025 comparison included a C$503.4 million non-cash impairment charge.
A second measure, adjusted EBITDA, showed a C$13.9 million loss versus a C$87.1 million loss the year before. However, the current adjusted figure excludes C$53.1 million in capacity-utilization costs associated with operating below normal levels. For a steel mill, expenses such as utilities, equipment and staffing do not disappear when fewer tons leave the gate. Algoma’s reported cost per ton of steel products sold rose to C$1,492 from C$1,282. The figures show improving underlying conditions in some areas, but not a business that has returned to profitability. That distinction matters when weighing talk of a turnaround.
A 125-Year Steelmaking Era Gives Way to Electric Furnaces
Algoma’s industrial transformation is happening alongside the trade disruption. The company permanently halted its blast-furnace and coke-making operations on January 18, 2026, ending its reliance on the old integrated steelmaking process. Throughout the third quarter, all liquid steel came from its first electric-arc furnace, which was still ramping up. The second furnace produced its first steel on October 9, after the quarter ended.
Electric-arc steelmaking changes more than the equipment inside a mill. It reshapes production schedules, the skills required on the plant floor and the amount of steel that can be produced during commissioning. Algoma says its completed system is designed for approximately 3.7 million tons of annual raw-steel capacity and projects 70% lower annual carbon emissions than before the change. Those are capacity and emissions targets, not proof that current output has reached that level. For now, the challenge is turning new technology into dependable, commercially competitive production.
An August Power Outage Added to the Pressure
Not every missing shipment can be traced to tariffs. On August 17, a turbine at Algoma’s Lake Superior Power generating facility shut down after detecting an abnormal condition. Because that plant supplies electricity to the steelmaking operation, Algoma temporarily stopped electric-arc furnace production. Its finishing and shipping activities could continue, but the disruption reduced its ability to make new steel.
Working with Ontario’s Independent Electricity System Operator, Algoma resumed furnace production on August 29 under temporary power arrangements. A replacement turbine restored full generating capability on September 30. The company planned a leased turbine while repairs continued, giving the site additional backup. For customers waiting on material, such interruptions matter even when deliveries are completed: production schedules, inventories and shipping plans must all be coordinated again. The outage compounded the effects of tariffs and a furnace ramp-up already underway, making the third-quarter volume collapse a story of several overlapping pressures.
Thicker Steel Plate Becomes the New Priority
Algoma is responding to lost American sales by changing what it sells. Instead of emphasizing steel coil, it is concentrating on discrete plate: thick, individual pieces used in structures and heavy industry. The company says it is Canada’s only producer in that category. During the third quarter, it shipped about 105,000 tons of plate, accounting for roughly 73% of all steel shipments.
That focus has improved sales values. Average net sales realization rose 33.7% from a year earlier to C$1,510 per ton, reflecting higher prices and a larger plate share. Demand includes infrastructure, construction and defence applications. In April, Algoma and Canadian armoured-vehicle manufacturer Roshel established a joint venture intended to develop domestic ballistic-steel capabilities. The partnership does not guarantee orders. Still, bridges, industrial equipment and defence manufacturing give Algoma markets to pursue as cross-border sheet sales retreat. The shift is about finding better customers, not merely replacing lost tons.
The Canadian Market Offers Opportunity, Not Shelter
Selling more steel inside Canada brings other pressures. Algoma says domestic prices have improved, but the market still faces excess supply. Canadian producers displaced from U.S. markets compete at home, U.S. steel continues to enter Canada, and offshore suppliers have offered products at prices Algoma believes may be below fair market value. That is Algoma’s assessment, not a ruling on imports.
The federal government has introduced tariff-rate quotas to limit imports of certain steel products. Under rules in effect since December 2025, imports above quotas face a 50% surtax, while eligible U.S. and Mexican steel is exempt from that particular measure. Those protections can help, but they do not automatically create orders for mills or eliminate domestic competition. Algoma therefore faces two linked problems: American customers have become harder to serve, while Canadian customers have more suppliers seeking their business. Specializing in higher-value plate is its answer to that squeeze.
The Cost Is Felt at Home in Sault Ste. Marie
In Sault Ste. Marie, the change is measured in paycheques as well as shipments. Algoma announced approximately 1,000 layoff notices in December 2025 as it accelerated the closure of its blast furnace and coke-making operations. The notices were scheduled to take effect from March 23, 2026, and the company later said workforce reductions were proceeding in phases. A notice does not necessarily mean every affected employee left on the same day.
Effects reach beyond the mill gates. Workers in coal-based steelmaking have faced retirement, retraining or new jobs. Families and nearby businesses must adjust when a local employer shrinks. Union representatives acknowledged that the transition to electric furnaces was already expected, but said tariffs brought the changes forward. That distinction matters: automation and cleaner production were transforming the workforce, while lost U.S. access intensified the pressure. A successful technical restart cannot, by itself, undo the disruption households have already experienced.
Canada and Ontario Commit Billions to Steel
Ottawa and Queen’s Park are trying to make Canada a stronger customer for its own steel. On October 21, Prime Minister Mark Carney and Ontario Premier Doug Ford announced a C$8.7 billion plan for steel, autos and critical minerals. Its Joint Steel Action Fund includes five-year commitments of C$3.55 billion federally and C$1.67 billion provincially.
The plan also emphasizes Canadian-made steel in public procurement, stronger enforcement against dumping and measures to improve shipping competitiveness. The policies align with Algoma’s plate strategy. But a funding announcement is not the same as a signed steel order or a grant to Algoma. Management said on the October 29 call that it was exploring how diversification projects might fit government programs. Algoma received C$124.5 million in advances under existing governmental loan facilities during the third quarter. The distinction matters: one initiative is sector-wide policy, while the other is financing already recorded by the company.
A Possible Rebound Still Has to Be Earned
Management expects operational relief before year-end. On its October 29 earnings call, Algoma forecast fourth-quarter steel shipments 25% to 35% above the third-quarter level, with more volume expected in November and December as its second electric furnace ramps up. Executives forecast better underlying results. These are forecasts, not actual shipments completed.
Algoma ended September with approximately C$428 million in available liquidity, including C$152.4 million in cash. That provides resources during the transition, but continuing losses and equipment costs remain risks. Management has indicated that average production in 2027 could be around 1.2 million tons, well below the facility’s projected eventual raw-steel capacity of 3.7 million tons annually. The next test is therefore practical: can Algoma produce more steel reliably, sell enough higher-value plate and reduce its exposure to a tariff-constrained American market? For workers and customers alike, a sustained recovery will matter far more than a promising quarter of guidance.
