Canada has been hit hard by proposed and actual tariffs since U.
S. President Donald Trump returned to office in January.
Until March 12, Canada received a full 25% exemption from Section 232 tariffs (along with Mexico) from May 2019. Steel importers in the United States now have to pay a 25% tariff on Canadian steel, with the potential for additional tariffs in the future.
The newly implemented tariff will reduce demand on Canada's steelmakers, and ultimately the size of the Canadian steel sector, unless import volumes are reduced and steelmakers diversify their export markets.
Canada, which is part of the USMCA Free Trade Agreement, has been the largest steel exporter to the United States since at least 2010. Its steel producers currently produce about 12 million tons of steel per year, half of which is shipped to the United States.
In 2024, almost 95% of Canadian exports were shipped to the United States, underscoring the country's dependence on the neighboring market. Canada is also one of the largest importers of U.
S.-made steel, with an average of nearly four million tons of U.
S. steel entering the country each year over the past decade.
Last year, Canada and Mexico imported 93% of the 8.4 million tons of steel exported from the United States.
Canadian steel prices are separating from us
.In October 2024, hot coil prices in the United States were US$772 per ton, compared to US$776 per ton in Canada.
By March, US prices were 38% higher.
MEP respondents say that initially Canadian mills were forced to "eat up" the 25% tariff.
However, this may not be sustainable over time.
Undervalued imports from other countries-currently subject to the same tariff rate as Canada-and increased domestic supply are likely to reduce U.
S. steel's reliance on Canadian steel. Reduced U.
S. demand is already being felt by Canadian manufacturers.
Only 414,000 tons of Canadian revitalized steel were imported in March, the lowest level since the early months of the Covid-19 pandemic in 2020. MEPS expects prices for us to remain 25% higher than in Canada as long as they remain in the 232 tarfs section.
This presents a challenge for Canadian mills, given the tightly integrated nature of the two economies.
Canada's main steel producers, Stelco, Dofasco and Algoma, the latter seems to be the most susceptible to current market pressures.
Canadian Steel Mills seek Government support
(1:2)(1:2)(2: 2: 2: Dofasco, supported by major parent companies, Algoma independently owns and manages approximately 3 mm-tons of annual steel output.
In addition, the company is nearing completion of an 875 million USD project to replace its blast furnaces with EAFS."The combination of this capital project
