On December 2, 2025, the city of Sault Ste. Marie, Ontario, was rocked by the announcement that Algoma Steel, one of Canada’s largest steel producers, would be laying off 1,000 workers and closing its blast furnace. The news landed like a thunderclap, sending shockwaves through the community and sparking urgent questions about the future of Canadian steel, the impact of U.S. tariffs, and the effectiveness of government intervention.
The layoffs, which will take effect on March 23, 2026, represent about 40 percent of Algoma’s workforce of 2,500-plus employees, according to company statements and local officials. The company’s decision is tied to two main factors: the punishing 50 percent tariffs on Canadian steel imposed by the Trump administration, and Algoma’s accelerated transition to electric-arc furnace technology—a move meant to modernize operations and dramatically reduce greenhouse gas emissions.
“This has been a challenging and sobering week for the company,” CEO Michael Garcia remarked, as reported by BNN Bloomberg. He acknowledged that the layoffs, while anticipated as part of the shift to more efficient technology, had been forced to happen much sooner than planned due to the sudden and severe impact of U.S. tariffs. “The Trump administration’s 50 percent tariff on foreign steel has fundamentally altered the competitive landscape,” Algoma said in a public statement. American buyers, once the company’s largest export market, have become “largely closed to us.”
Algoma’s third-quarter sales dropped 13 percent, with $89.7 million in direct tariff expenses reported in just one quarter. The company also revealed a staggering $652 million operational loss during this period—an eye-popping leap from the $83.6 million loss in the same quarter last year, as highlighted by The Sault Star. The tariffs, in short, have slammed the door on U.S. sales and left Algoma scrambling to survive.
But tariffs aren’t the only reason for the layoffs. The company’s transition to electric-arc furnace steelmaking, backed by more than $500 million in federal and provincial emergency loans since 2021, is itself a double-edged sword. On one hand, the new technology is expected to cut greenhouse gas emissions by 70 to 80 percent—a huge environmental win. On the other, electric-arc furnaces are far less labor-intensive than traditional blast furnaces, meaning fewer jobs are needed to keep the plant running.
“If you can undercut everyone because you’re producing so much cheaper than they are, then who would not want to buy from you?” said Colin Mang, an economics professor at McMaster University and an expert on the Canadian steel industry, in an interview with CBC News. According to Mang, the government’s generous support was meant to help Algoma weather the storm of U.S. tariffs and manage the transition to cleaner, more competitive technology. “That was the thinking—that this would help to just really drive productivity in the Canadian steel industry.”
Yet the government’s approach has drawn criticism for not including job guarantees. Bill Slater, president of the Algoma Steel Local 2724 union, argued that “the loans should have been tied to maintaining employment levels.” He told CBC, “But our government keeps giving money out to companies without having employment levels tied to the loans or the grants.”
Indeed, the $500 million in loans provided in September 2025—$400 million from the federal government and $100 million from Ontario—came on top of $420 million in federal funding Algoma received in 2021. That earlier funding was earmarked for the company’s shift away from coal-fired plants and toward the electric-arc furnace technology now at the heart of the layoffs. “There’s a long-range plan,” said Peter Warrian, an economist at the Munk School of Global Affairs and Public Policy, speaking to CBC. “At the end of the day you get a major environmental improvement.”
But the accelerated timeline for layoffs, brought on by the cash crunch from tariffs, has made the transition abrupt and painful. “Had Algoma been able to stretch out the time period of scuttling the blast furnaces, it would have made the layoffs more manageable,” Warrian noted.
Algoma’s CEO, Michael Garcia, was asked by CBC whether the government knew about the impending layoffs when it approved the latest round of loans. “I don’t think anybody would loan us $500 million without understanding the business plan for the company, without understanding what the tariff impact was on the company,” Garcia responded. He added that both Algoma and government officials “have understood since 2022 that they would be shuttering their blast furnace and coke oven operations when they transitioned to electric-arc furnace production.”
The layoffs have caused significant anxiety in Sault Ste. Marie and the surrounding region. Local officials, including Mayor Matthew Shoemaker, have called the job cuts “the obvious consequence of six months of 50 percent steel tariffs,” and stressed the urgent need for a new trade deal with the United States. “This really shines a light on the need to get the tariff deal done—yesterday,” Shoemaker told SooToday. The mayor also pointed to the need for immediate action from the federal government to turn domestic procurement plans into steel orders, which could help sustain Algoma and its workers.
Community leaders warn that the fallout will ripple through the local economy, affecting not just steelworkers but also secondary businesses, real estate prices, and social services. “The Sault is a big family,” Shoemaker said. “We are a community that treats our neighbours like family, and when any one member of the family suffers a crisis or pain, like many of our Saultites are feeling today, the job of the rest of us is to support them and give them a shoulder to lean on.”
Unions have also sounded the alarm. The United Steelworkers warned that the layoffs will devastate the community and called for faster support and retraining opportunities for affected workers. Local municipalities and former business leaders echoed these concerns, urging all levels of government to step up with meaningful economic and social assistance.
Federal officials have been quick to promise support. Industry Minister Mélanie Joly confirmed that Ottawa is in contact with Algoma and will help workers affected by what she called “unjustified and unjustifiable tariffs imposed by the White House.” Finance Minister François-Philippe Champagne emphasized the need to protect domestic production and implement Buy Canadian policies, telling reporters, “In times like that, the first thing we need to do is support workers—we put the program in place, we’ve been in touch with the company to be sure we can support them.”
As Algoma Steel looks to restructure its operations and seek new markets, the company says it will continue working with governments to ensure its survival. The coming months will test the resilience of Sault Ste. Marie and its people, as they face economic uncertainty and await the results of both policy action and market forces.
For now, the layoffs stand as a stark reminder of how global trade tensions, technological change, and government intervention can collide—with consequences that hit home in the most personal of ways.
