European metals producers could see material relief if the United States and Canada finalize an agreement to reduce Section 232 tariffs on Canadian steel and aluminium from 50% to 25%, according to a Morgan Stanley note published Thursday. The assessment follows Bloomberg reporting that Washington paused planned 50% tariffs on certain Canadian goods for three days as negotiations progressed.
ArcelorMittal is positioned as the primary beneficiary among European peers, with Morgan Stanley estimating annualized pre-tax relief of $300 million to $350 million. The figure represents roughly 3% of the company’s 2027 consensus EBITDA. The relief stems from cost reductions on approximately 2 million tonnes of Dofasco flat steel exported annually from Canada to the U.S. Under the current 50% tariff framework, Morgan Stanley estimates the company’s tariff burden at a minimum of $600 million to $700 million, assuming equal cost-sharing with customers. Management previously indicated a quarterly drag of about $150 million, though Morgan Stanley noted this may have reflected lower steel price assumptions. Partial offset could arise from lower U.S. steel prices following the tariff reduction.
Rio Tinto’s outlook is rated neutral to modestly positive. The miner shipped 585,000 tonnes of aluminium to U.S. destinations in the first half of 2026, about 35% of its 1.676 million-tonne group production. Gross tariff costs totaled $773 million in the period, implying an annualized run-rate near $1.50 billion. If tariffs are halved across all eligible volumes, gross annualized benefits could reach roughly $800 million, or about 3% of 2027 consensus EBITDA. Normalization in regional premiums, shifts in destination mix, and potential reductions in Matalco’s contribution could erode part of the gross benefit.
SSAB, a Swedish steelmaker, is flagged as a modest negative. The company has approximately 2 million tonnes per year of U.S. plate exposure. Morgan Stanley notes that every $10 per tonne move in plate prices shifts SSAB’s EBITDA by roughly 200 million Swedish crowns, or about 1% of 2027 consensus EBITDA. Lower tariffs would improve Canadian supply economics—particularly from Algoma—and could ease current U.S. plate tightness, though Algoma’s temporary electric arc furnace outage may limit the near-term supply response.
Norsk Hydro’s exposure is primarily through U.S. recycling and extrusion margins rather than Canadian primary metal. The company operates about 1.1 million tonnes per year of U.S. recycling capacity. A reduction in the Midwest premium would narrow the primary metal-to-scrap price differential, partially unwinding exceptional margins described by Morgan Stanley.
