Canada to Lend Algoma Steel C$500 Million to Deal With U.S. Tariff Squeeze — 2nd Update

By Paul Vieira

OTTAWA--The governments of Canada and Ontario are providing Algoma Steel Group with a half-billion Canadian dollars of financing that the company says it needs to survive the Trump administration's 50% tariffs on the metal.

The Canadian government is lending the steel producer 400 million Canadian dollars, or the equivalent of $287.5 million, while the province of Ontario is chipping in with C$100 million. The loan marks the first piece of relevant financial support Prime Minister Mark Carney has delivered for an individual steel company, which are struggling under hefty U.S. duties on their products.

Entering 2025, Canada was America's largest foreign supplier of the metal, used in the construction of cars, appliances and infrastructure such as bridges. Algoma Chief Executive Michael Garcia said President Trump's tariffs have effectively shut out Canadian steel from the world's largest economy.

"We require this liquidity support to withstand this unprecedented U.S. governmental action, and importantly, to continue our transformation for the future," Garcia said, adding his company would shift part of its focus to supply domestic demand.

Shares in Algoma rose 7% to C$5.90 early Monday in trading on the Toronto stock market, in response to the financial lifeline from Canada. Year to date, Algoma shares are down about 58%.

Canada's Finance Minister Francois-Philippe Champagne said the financing would help Sault Ste. Marie, Ontario-based Algoma to continue operations, limit layoffs and help the company transition to a business model less reliant on U.S. demand. Trade data from Statistics Canada indicate that metals exports -- which includes steel, but also aluminum and copper, which also face U.S. tariffs -- have declined 15% from levels in January, when President Trump returned to office for a second term.

Garcia said Monday the company has decided to shut down production from its blast furnace and coke ovens, saying those operations are now "unsustainable" amid U.S. tariffs. He said the company would accelerate its transition to production from its leading-edge electric arc furnace, which started to manufacture steel products over the summer. Algoma expects the final cost on completing the electric furnace to reach nearly C$1 billion.

According to the company, the financing, in the form of credit facilities, carries an interest rate equal to Canada's benchmark overnight-funding rate, plus 2 percentage points. Presently, that represents interest of 4.56%. Canada would be eligible to acquire shares in Algoma should the company draw on these facilities, the Sault Ste. Marie, Ontario-based company said.

Earlier this month, Canada's Liberal government unveiled a series of measures aimed at helping the sectors most affected by Trump's tariffs. Besides steel, Canada faces hefty U.S. tariffs on its aluminum, automobiles and softwood lumber, used in the construction of homes. Prime Minister Carney is now trying to introduce policy aimed at rewiring the Canadian economy to reduce its reliance on U.S. trade, which accounts for roughly one-fifth of Canadian gross domestic product.

Furthermore, Canada imposed limits on how much foreign steel can enter the domestic market from countries that don't have trade treaties with Ottawa. About two-thirds of the steel consumed in Canada comes from abroad.

Write to Paul Vieira at paul.vieira@wsj.com

(END) Dow Jones Newswires

September 29, 2025 10:27 ET (14:27 GMT)