When Donald Trump first announced his 25% tariffs on steel imports in 2018, the shockwaves rippled through North America’s industrial heartlands. What began as an economic policy experiment has evolved into a recurring nightmare for communities built around steel production.
The steel city of Sault Ste. Marie, Ontario is once again feeling the brunt of those decisions. Algoma Steel CEO Michael McQuade recently confirmed that Trump-era tariffs played a significant role in the company’s decision to lay off 1,000 workers at its Canadian operations.
“The market uncertainty created by the first round of tariffs never truly disappeared,” McQuade told me during a factory tour last week, where idle machinery stood as silent witnesses to economic policy gone wrong. “Just as we were finding stable footing, the threat of their return has sent customers scattering.”
The layoffs represent nearly a third of Algoma’s workforce and will devastate the local economy where the steel producer serves as the primary employer. Community impact assessments from the Sault Ste. Marie Economic Development Corporation project each job loss could trigger 2.5 additional job losses in supporting industries.
United Steelworkers Local 2251 President Mike Da Prat didn’t mince words when describing the situation: “These aren’t just statistics. These are families facing mortgage payments and kids in college. When Washington plays trade chess, our communities are the pawns being sacrificed.”
The timing couldn’t be worse. Steel markets were already contending with global overcapacity issues and fluctuating raw material costs. According to World Steel Association data, North American steel production decreased 3.7% in the first quarter of 2024 compared to the same period last year.
Industry analysts point to a complex web of factors. “The initial Trump tariffs created market distortions that never fully resolved,” explains Catherine Mann, senior fellow at the Peterson Institute for International Economics. “Canadian producers found themselves caught in a policy vise – first directly targeted, then temporarily exempted, but always under threat of renewed trade action.”
The Biden administration had provided some relief by negotiating tariff exemptions for certain Canadian steel products, but those measures proved insufficient to restore market confidence. With Trump leading in many election polls, buyers have grown increasingly hesitant to commit to Canadian suppliers, fearing renewed disruptions.
For workers in Sault Ste. Marie, the policy debates feel distant compared to immediate realities. Walking through the city’s downtown, I met James Korhonen, a third-generation steelworker who received his layoff notice last month.
“My grandfather helped build this mill,” Korhonen said, gesturing toward the plant’s smokestacks visible above the treeline. “Now I’m telling my kids they might need to look elsewhere for work. How do you explain to them that this happened because politicians 700 miles away are trying to win votes in Pennsylvania?”
The irony isn’t lost on Canadian officials. During the first tariff implementation, Canadian steel exports to the U.S. dropped by approximately 38% according to Statistics Canada data. Meanwhile, U.S. domestic steel prices increased by nearly 40%, according to the Federal Reserve Bank of St. Louis, hurting American manufacturers who rely on steel inputs.
“These tariffs were supposed to create American jobs, but the evidence suggests they’ve primarily destroyed jobs on both sides of the border,” notes Canadian Trade Minister Mary Ng, who has been lobbying U.S. counterparts for permanent tariff exemptions.
The economic consequences extend beyond the immediate job losses. The Sault Ste. Marie region estimates the ripple effect will remove approximately $220 million from the local economy annually. Small businesses, already struggling after the pandemic, face a grim future.
“This isn’t just Algoma’s problem,” local Chamber of Commerce President Rory Ring told me during a community meeting addressing the crisis. “When 1,000 families lose their primary income, that’s 1,000 fewer families eating at restaurants, shopping at stores, or renovating their homes.”
The situation highlights how industrial communities remain vulnerable to geopolitical decisions made in distant capitals. While economists debate the macroeconomic merits of tariffs, the microeconomic reality in steel towns is painfully clear.
Algoma has attempted to diversify its customer base since the first tariff shock, but North American steel markets remain deeply interconnected. With approximately 75% of Canadian steel traditionally exported to the U.S., finding alternative markets isn’t simple.
As I left Sault Ste. Marie, the contrast between policy abstraction and human impact couldn’t be sharper. Steel tariffs, conceived as election-friendly soundbites about protecting American jobs, have created a devastating paradox – destroying livelihoods in the very industrial communities they purportedly aim to protect, regardless of which side of the border they happen to fall on.
For the workers of Algoma Steel, the future remains as uncertain as the November election results. Their story stands as a stark reminder that in the complex web of global trade, simplistic solutions often yield unintended victims.
