Algoma Steel Layoffs 2025: 1,000 Workers Hit as U.S.–Canada Trade War and Green Steel Transition Collide

SAULT STE. MARIE, Ont. — One of Canada’s oldest steelmakers has become the latest flashpoint in the escalating trade war between Ottawa and Washington.

In late November, Algoma Steel confirmed it is issuing layoff notices to more than 1,000 workers at its Sault Ste. Marie mill, with job losses expected to roll out over the coming months. The cuts land at the intersection of two powerful forces: punishing U.S. steel tariffs and a massive technological shift to lower-carbon electric arc furnace (EAF) steelmaking. ^[1]

Local coverage from Northern Ontario outlets and national broadcasters including CTV News, SooToday and CBC describes a community stunned by the scale of the notice, which affects both salaried and hourly workers represented by United Steelworkers (USW) locals 2724 and 2251. ^[2]

What Algoma Steel has announced

Algoma’s latest layoffs do not come out of the blue. As far back as 2024, the company warned that its transition away from traditional blast furnace steelmaking toward electric arc furnaces would eventually mean about 1,000 fewer jobs at the Sault Ste. Marie facility. ^[3]

That long-anticipated restructuring is now being accelerated:

More than 1,000 employees are receiving layoff notices, with the company indicating the reductions will be phased in over the coming months rather than overnight. ^[4]
The cuts are tied both to a permanent shift in production technology (from blast furnace to EAF) and to a deteriorating trade environment that has sharply reduced access to Algoma’s historically critical U.S. market. ^[5]

Algoma has already been quietly trimming headcount. Earlier in 2025, local reports and union officials acknowledged that dozens of workers had been laid off as tariffs and weak demand began biting, with roughly 200 positions gone by mid‑year. ^[6]

Monday’s layoff notices, however, represent a decisive turn: the move from gradual attrition to a wholesale workforce reset.

Tariffs and trade war: why Algoma is in the crosshairs

Algoma’s troubles can’t be understood without the broader 2025 U.S. trade war with Canada and Mexico. In February, U.S. President Donald Trump imposed sweeping tariffs—eventually raising duties on Canadian steel imports to 50% under Section 232 of the U.S. Trade Expansion Act. Canada retaliated with its own counter‑tariffs, triggering a full‑blown trade confrontation. ^[7]

Algoma has been hit particularly hard:

In its third‑quarter 2025 earnings, the company reported a net loss of $485.1 million, largely driven by a $503.4 million non‑cash impairment linked to trade-related pressures and weaker market conditions. ^[8]
Direct tariff costs on U.S.-bound steel reached $89.7 million in Q3 alone, with $164.3 million in direct tariffs over the first nine months of the year. U.S. shipments represented roughly half of Algoma’s total steel volume. ^[9]
Because the U.S. market is now effectively closed to competitively priced Canadian steel, Algoma has been forced to redirect more product into Canada at sharply discounted prices. The company estimates Canadian transactional prices were up to 40% lower than comparable U.S. levels during the quarter, shaving tens of millions off revenue. ^[10]

In the earnings release, CEO Michael Garcia bluntly described the situation: the U.S. steel market is “largely closed” to Algoma, forcing the company to rethink its business model and accelerate its EAF transition to cut costs and reduce tariff exposure. ^[11]

Meanwhile, Ottawa has doubled down on its tariff strategy. Canada has imposed its own duties and quotas on steel imports from non–free‑trade agreement partners, while also granting targeted tariff relief on specific products to protect downstream manufacturers. ^[12]

Electric arc furnace transition: cleaner steel, fewer jobs

Long before Trump’s latest tariffs, Algoma was in the midst of a multiyear modernization to replace aging blast furnaces and coke ovens with electric arc furnace technology. In July 2025, the company announced “first arc” and first steel from its new EAF Unit 1, a milestone in its decarbonization strategy. ^[13]

By late 2025:

EAF operations were running on a limited two‑day‑per‑week schedule as ramp‑up continued, with a plan to move to five days a week in mid‑November as blast furnace operations are decommissioned more quickly. ^[14]
Once the transformation is complete, Algoma expects an annual raw steel capacity of around 3.7 million tonnes and an estimated 70% reduction in carbon emissions, aligning the mill with global “green steel” trends. ^[15]

The catch: EAFs are far more labour‑efficient than blast furnaces. Multiple analyses, including independent PESTLE research on Algoma Steel Group Inc., have flagged that the EAF shift would likely translate into about 1,000 permanent job losses in Sault Ste. Marie, even in a best‑case trade scenario. ^[16]

In other words, tariffs have accelerated and intensified a downsizing that was already structurally baked into Algoma’s transition to cleaner steel.

Government steps in: a $500 million lifeline

Recognizing Algoma’s central role in Northern Ontario’s economy—and the political peril of major job losses in a flagship industry—the federal and Ontario governments have assembled a substantial rescue and transition package.

In late September, Ottawa announced C$400 million in financial support for Algoma via its Large Enterprise Tariff Loan (LETL) facility, part of a $10‑billion program aimed at large companies slammed by tariffs. The Ontario government added a C$100 million loan, bringing total government‑backed liquidity to C$500 million. ^[17]

Key elements:

The loans are explicitly framed as support to help Algoma withstand U.S. tariffs, accelerate its EAF transition and maintain operations during a turbulent period. ^[18]
Ontario’s 2025 Fall Economic Statement highlights Algoma as a flagship case for its “Protect Ontario Financing Program,” noting that the province’s loan is meant to help the company reduce reliance on U.S. markets and keep steel jobs in the province. ^[19]
Ottawa’s LETL parameters have been tweaked to prioritize worker retention and extend loan maturities, reflecting political pressure to ensure public money isn’t simply underwriting shareholder value while workers are laid off. ^[20]

In Algoma’s Q3 earnings release, CFO Rajat Marwah called the $500‑million package a critical boost to liquidity that would give the company “long‑term financial flexibility” to complete its EAF transformation and diversify markets. ^[21]

Union and community reaction: “Too much uncertainty”

For the steelworkers of Sault Ste. Marie, the government lifeline is welcome—but not enough.

In a statement responding to the financing announcement, United Steelworkers (USW) said the support package is “a step forward” but warned that workers still face “too much uncertainty” about their jobs, retraining options and the long‑term future of the mill. The union is calling for binding job guarantees, transparent restructuring plans and significant funding for retraining and diversification in Northern Ontario. ^[22]

USW’s Ontario and Atlantic Canada director, Kevon Stewart, emphasized that steelworkers in Sault Ste. Marie have already been bracing for layoffs tied to the EAF project. He urged governments to expand training, reskilling and community‑development funding so that the transition doesn’t simply hollow out the local economy. ^[23]

Locally:

USW Local 2251 represents Algoma’s hourly production and maintenance workers, while USW Local 2724 covers roughly 500 salaried staff, including technical and supervisory employees. ^[24]
Community organizations and labour groups note that Algoma is a “cornerstone employer” in the city, with around 2,500 full‑time jobs tied directly to the mill and many more in the supply chain. ^[25]

The fear is straightforward: if Algoma shrinks too far or fails, Sault Ste. Marie’s entire economic base could be destabilized.

Economic impact on Northern Ontario

The layoffs arrive at a delicate moment for Ontario’s economy.

A recent Ontario economic outlook from Desjardins forecasts modest provincial growth—1.1% in 2025 and 1.4% in 2026—but warns that manufacturing, including steel, faces “material headwinds” from U.S. tariffs and trade uncertainty. The report notes that Hamilton and Sault Ste. Marie, home to Canada’s two major integrated steelmakers, are bearing the brunt of these shocks. ^[26]

At the same time:

Mining and private services are expected to be growth drivers, especially in Northern Ontario, thanks to high gold prices and critical mineral projects linked to the Ring of Fire. ^[27]
Ontario is rolling out Protect Ontario Workers Employment Response (POWER) Centres, with $20 million in funding to support laid‑off workers through training and job‑search assistance; Algoma workers are likely to be a major client group. ^[28]

Still, analysts warn that even with retraining programs, replacing over 1,000 well‑paid industrial jobs in a mid‑sized city will be extremely difficult. Local businesses—from auto dealers and construction firms to restaurants—face the prospect of lower spending as household incomes fall.

Global steel outlook: overcapacity and sluggish demand

Algoma’s struggles are also a microcosm of a global steel industry in crisis.

According to the OECD Steel Outlook 2025, worldwide steelmaking capacity is on track to massively outstrip demand. Excess capacity could reach 721 million tonnes by 2027, equal to roughly the entire current steel output of all OECD countries combined. ^[29]

A recent OECD Steel Committee statement and related analyses highlight several trends:

Chinese steel exports hit record levels in 2024 and rose another 10% in the first half of 2025, depressing prices and margins for producers worldwide. ^[30]
Western allies—including Canada, the U.S. and the EU—are exploring coordinated defences against what they describe as “market‑distorting” subsidized steel from China, but implementation is complex and slow. ^[31]
The World Steel Association expects global steel demand to stay essentially flat at around 1.75 billion tonnes in 2025, with only a modest 1.3% recovery projected for 2026. Demand growth is concentrated in India and parts of the developing world, while mature markets in North America and Europe remain weak. ^[32]

In this environment, even highly efficient mills face intense pressure. Excess capacity keeps prices low, while decarbonization investments and high power costs require significant capital outlays.

For Algoma, the implication is stark: going green is necessary but not sufficient. Without improved market access and some easing of the trade war, the company will remain squeezed between high costs and limited revenue.

What’s next for workers and the company?

Short‑term: layoffs, retraining and political pressure

Over the next several months, the focus will be on:

How many of the more than 1,000 layoff notices translate into permanent job losses versus early retirement, attrition or internal transfers. ^[33]
The speed and generosity of retraining programs funded by Ontario’s POWER centres, federal labour adjustment programs and industry‑led initiatives (including those already being developed for Algoma workers by labour and skills organizations). ^[34]
Whether Ottawa and Queen’s Park increase pressure on Washington to relax steel tariffs—or at least provide additional targeted relief—before more mills announce layoffs or closures. ^[35]

Given the political symbolism of steel jobs, expect Algoma’s future to become a recurring theme in both federal and provincial debates over how Canada should navigate its relationship with a protectionist U.S.

Medium‑term: can EAF plus government aid be enough?

If Algoma successfully ramps up its EAF operations and taps its full $500‑million public financing, the company could emerge as one of North America’s lowest‑cost producers of low‑carbon plate steel—an asset class likely to benefit from infrastructure spending, defence procurement and energy projects. ^[36]

But several risks loom:

Continued or expanded U.S. tariffs could keep the high‑value U.S. market largely off‑limits, forcing Algoma to fight for share in a smaller Canadian market. ^[37]
Global overcapacity and cheap exports from Asia could cap prices even as input costs rise, pressuring margins. ^[38]
Community backlash over permanent job losses could fuel demands for stronger conditions on government financing, such as job‑creation targets or local procurement rules for infrastructure that uses Canadian steel. ^[39]

For now, Algoma management argues that accelerating the EAF transformation is the best way to secure a long‑term future for the mill, even if it means a smaller workforce.

Key numbers at a glance

>1,000 – Workers receiving layoff notices at Algoma Steel in Sault Ste. Marie. ^[40]
2,500 – Approximate number of full‑time jobs provided by Algoma in Sault Ste. Marie before the announced cuts. ^[41]
$485.1 million – Algoma’s net loss in Q3 2025, including a large non‑cash impairment. ^[42]
$89.7 million (Q3) / $164.3 million (year‑to‑date) – Direct U.S. tariff costs on Algoma’s steel sales in 2025. ^[43]
C$500 million – Combined federal and provincial financing support (C$400M federal LETL + C$100M Ontario loan). ^[44]
70% – Expected reduction in Algoma’s carbon emissions once the EAF transition is complete. ^[45]
721 million tonnes – Projected global excess steel capacity by 2027, according to the OECD. ^[46]

As Sault Ste. Marie steelworkers absorb the shock of more than a thousand layoff notices, Algoma has become a vivid case study of how trade policy, climate transition and industrial strategy collide on the ground.

Whether the mill’s green transformation and government lifelines can ultimately save—rather than simply shrink—the industry in Northern Ontario will depend on what happens next in Washington, Ottawa and the global steel market.