A Lose-Lose Situation for the U.S. and Canada

The United States' decision to impose a 25% tariff on Canadian steel and aluminum would not only hurt Canada but would also have severe economic repercussions within the U.S. itself. While these tariffs are often framed as a way to protect domestic industries, they end up increasing costs for manufacturers, threatening jobs, and straining U.S.-Canada trade relations. For smaller steel-dependent communities like Sault Ste. Marie, Ontario, the effects could be devastating, leading to job losses, economic slowdown, and long-term instability.

The Direct Impact on Sault Ste. Marie and Canada

Sault Ste. Marie is home to Algoma Steel, one of Canada’s largest steel producers. A 25% tariff on exports to the U.S. means that Algoma’s steel becomes significantly more expensive for American buyers, making them less likely to purchase it. The result?

• Revenue decline for Algoma Steel as American customers look elsewhere or pay higher costs.

• Job losses at Algoma Steel, affecting thousands of workers and their families.

• Ripple effects on local businesses that depend on the steel industry, such as suppliers, contractors, and transport companies.

• Reduced consumer spending in the community, affecting retail stores, restaurants, and public services.

For a city that relies heavily on steel production, these tariffs could weaken the entire local economy, forcing layoffs and potentially leading to long-term economic instability.

How the U.S. Suffers Too

While the U.S. aims to protect its steelmakers, the tariffs backfire in several ways:

• Higher costs for U.S. manufacturers: The auto, construction, aerospace, and beverage industries rely on affordable Canadian steel and aluminum. With tariffs, production costs increase, making American-made products more expensive.

• Job losses in steel-consuming industries: The 2018 steel tariffs resulted in more job losses in manufacturing than jobs gained in steel production. Sectors like automobiles, construction, and food packaging will see job cuts due to higher raw material costs.

• Higher prices for American consumers: Since manufacturers face increased costs, consumers will pay more for cars, homes, appliances, and canned goods.

• Retaliatory tariffs from Canada: Canada is the U.S.’s largest trading partner. If Canada imposes counter-tariffs, it will hurt U.S. farmers, manufacturers, and exporters, especially in agricultural products like dairy, pork, and soybeans.

• Disruptions to supply chains: North America operates under an integrated supply system, and tariffs throw this balance off, creating business uncertainty and discouraging investment.

A Trade War Hurts Small Communities the Most

In small, steel-dependent communities like Sault Ste. Marie, Ontario, and U.S. manufacturing towns in Michigan, Ohio, and Pennsylvania, these tariffs create economic uncertainty and job instability. Unlike large urban centres, these towns rely on a few key industries, meaning the impact of a trade war can be devastating.

Workers who lose their jobs may not have alternative employment opportunities, leading to increased financial stress, business closures, and a declining local economy. Public services, infrastructure projects, and even the housing market could suffer as a result.

A Policy That Harms More Than It Helps

Instead of boosting domestic industry, the 25% tariff on Canadian steel and aluminum would create higher costs for U.S. manufacturers, job losses in both countries, and strained diplomatic relations. Small communities that depend on steel production will bear the brunt of the damage, as job losses lead to a broader economic decline. Rather than engaging in trade wars that hurt both sides, the U.S. and Canada should focus on cooperation, fair trade policies, and strengthening North American manufacturing together.

Find The Right Fault

By the way, no this is not Justin Trudeau's fault. It is not the Liberal Government of Canada's fault. On November 30, 2018 the United States-Mexico-Canada Agreement (USMCA) was signed by Donald Trump, Justin Trudeau, and Enrique Pena Nieto. That agreement includes specific provisions related to steel and aluminum trade among the three member countries. The USMCA does not have a fixed expiration date, but it includes a 16-year sunset clause, meaning it will automatically expire on July 1, 2036, unless the three countries agree to extend it.

Additionally, the agreement requires a joint review every six years (first review in 2026) to decide whether to extend it for another 16 years. If the parties agree, the expiration date will be pushed further.

On February 10, 2025, Donald Trump broke the agreement he signed that he said was great. 

This is an opinion article by Guido Piraino of  The Monthly Social Podcast. It may also be heard on The Path Radio Mix Online. You can read other opinion articles on the blog page. You may also enjoy video content of The Monthly Social Podcast on YouTube or The Path Radio Mix on YouTube.  For sports content, please consider The Coach's Call YouTube Podcast.