Thank you.
Mr. Chairman, members of the committee, thank you for the invitation to appear here today to speak about the impact of U.S. tariffs on Canadian businesses, companies and workers.
Today, I represent over 3,000 employees who work at Algoma in Sault Ste. Marie, Ontario. Algoma has a long history in the city of Sault Ste. Marie as an integrated, primary steel producer. During the First World War, Algoma produced steel for artillery shells used by Canada and our allies. We were one of the largest steel producers in Canada during the Second World War. Today, Algoma produces sheet steel and plate for use in the automotive, energy and infrastructure and manufacturing industries. We are the only domestic plate manufacturer in the country, and our products have formed an integral part of major infrastructure projects from coast to coast for over a century.
Algoma steel plate is being used today to construct the Champlain Bridge in Montreal. We also play a significant role in the Soo as both an economic engine and a trusted community partner. We employ over 3,000 skilled workers and support a further 10,000 indirect jobs in the Soo. Our footprint represents over 40% of the city's GDP. We also support over 6,000 pensioners, the majority of whom reside in the region. Our payroll sits at around $300 million and we spend a further $1.2 billion annually on goods and services, of which about $120 million is spent with over 600 local suppliers.
U.S. President Donald Trump's announcement of 25% import tariffs on Canadian steel under section 232 of the Trade Expansion Act has had a significant impact on Algoma's exports to the U.S. In the short period of time these tariffs have been in place, we have seen a drop in exports to key states where we sell the majority of our products, such as Minnesota, Michigan, Illinois and others. The U.S. administration's actions are completely unjustified and are having an extremely damaging impact on the overall health of the Canadian steel industry and pose a significant threat to the long-term growth of companies like Algoma.
Canada and the U.S. have always enjoyed a balanced and complementary trade relationship in steel, founded on fair market principles embraced by both countries. In 2017, over 10 million tonnes of steel with a market value of over $12 billion was traded between our two countries. This is fair, equal and balanced on both sides of the border. Despite the challenge our industry is facing, we would like to applaud this government for acting swiftly and retaliating with their own set of tariffs on the U.S. and also for considering a safeguard process here in Canada. These measures provided vital life blood to our industry and have allowed us to sustain our businesses in the short term.
In the long run, however, the U.S. remains a critical export market for Canadian steel products, and we may find ourselves to be in a much more difficult situation in the near future as global prices on steel products are forecasted to drop significantly before they eventually stabilize. With that being said, we are encouraged with the new USMCA and the protection on auto tariffs it contains.
To conclude, Algoma wishes to continue to work closely with the Canadian government to secure a complete exclusion from section 232 for Canada. This is our number one priority. However, in the event that such an exclusion proves impossible to negotiate, we would recommend that the government explore a quota-based system in exchange for tariff exemption. This would not be an ideal scenario, but President Trump has indicated in the past and did so again yesterday, that this would be his preferred approach. In recent months, we have seen Argentina, Brazil and South Korea all accept quotas and limit their volumes of exports to the U.S. in exchange for tariff exemptions. It is our belief that a product-wise, company-based quota on steel should reflect historical exports to the U.S. It is imperative that the government manages the quota to avoid a rush to the border and negative market impacts. This formula has been used effectively by Canada for softwood lumber in the past, based on previous years' exports by producers.
Additionally, if Canada is able to negotiate a quota-based system similar to the model used for autos in USMCA, it will still provide sufficient growth opportunities.
Thank you very much for your time.
I'll be glad to take any questions.