Tariffs have roughly the same subtlety as a steel beam through a shop window. Add a 25% tax to an imported product, and the foreign supplier suddenly needs a much better price, while a domestic producer can become more attractive without changing a thing. That creates an intriguing opportunity, although certainly not a free lunch.
Governor Tiff Macklem; Source: Bank of Canada
New tariffs touching down
The Government of Canada removed most broad counter-tariffs in September 2025, but kept 25% tariffs on American steel, aluminum, and automobiles. The United States has now announced additional 50% tariffs on selected Canadian goods beginning August 19. Prime Minister Mark Carney says further countermeasures remain possible, although Canada hasn’t announced the next package.
That can hurt. The Canadian importer pays the tariff, which can raise costs for businesses and consumers. Domestic producers may gain pricing power or win orders previously filled by American suppliers, but only if they have enough capacity and customers still want the product. Steel provides a particularly clear example.
Investors shouldn’t purchase every company waving a maple leaf. Trade wars can reduce economic growth while increasing expenses for companies on both sides of the border. Anyone buying stocks in Canada should therefore focus on a business with a domestic advantage and another catalyst beyond political shouting. That is why today, we’re focusing on this steel stock.
A steel opportunity
Algoma Steel Group (TSX:ASTL) offers precisely that combination, although it comes with enough risk to rattle the cutlery. The Sault Ste. Marie producer manufactures sheet and plate steel used in construction, infrastructure, energy, shipbuilding, automotive manufacturing, and defence.
Algoma stock is Canada’s only producer of discrete plates, giving it a valuable position as governments push domestic procurement and defence manufacturing. Its first electric arc furnace is operating, while the second is expected to begin producing steel during the third quarter. That transition should eventually lower costs and create cleaner steel for Canadian projects.
The company has already started reducing its reliance on America. U.S. shipments represented 28% of first-quarter volume, down from the historical 45% to 55% range, as Algoma redirected sales toward Canadian customers. Record plate sales suggest infrastructure and defence demand may help absorb some of that displaced production.
Considerations
Management expects second-quarter adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) between $5 million and $15 million. Investors shouldn’t celebrate with industrial-sized confetti just yet. That forecast includes a $45 million insurance settlement and another sizeable capacity-utilization benefit, meaning the underlying operation remains under pressure.
At a recent $6.10, Algoma stock trades approximately 33% below its 52-week high. A price-to-earnings ratio isn’t useful because the company remains unprofitable, making this a turnaround rather than a conventional value stock. Second-quarter results on July 29 should reveal whether the furnace ramp-up is repairing the financial picture.
What’s more, Algoma stock faces weak steel demand, execution risk, tariff costs, government-backed debt, and the challenge of replacing American sales. A broader trade war could also delay the Canadian projects meant to support its comeback. This isn’t a core holding or one of the Canadian blue-chip stocks investors can purchase and promptly forget.
Bottom line
A small speculative position could still pay off if Canadian procurement, defence spending, and existing counter-tariffs direct more orders toward Algoma stock while its new furnaces improve production. The company doesn’t merely need politicians to keep arguing. It needs Canada to start building and do so with Canadian steel.
