Algoma Steel's shares surged as investors weighed a possible trade breakthrough between Canada and the U.S. after President Trump paused a threatened 50% tariff on certain Canadian imports.

Shares were 13% higher at C$6.42 in late morning trading on Wednesday. The stock is still down 10% in the past three months.

Algoma has been hard hit by the Trump administration's sectoral tariffs aimed at the steel industry.

The Canadian steelmaker has warned the earlier 50% U.S. Section 232 tariff had fundamentally altered and permanently disrupted its cross-border business model and effectively foreclosed its historical access to the U.S. market. The shift in U.S. policy has pushed Algoma toward a Canada-centric strategy and opportunities in infrastructure, construction and defense that have been bolstered by the federal government's efforts to strengthen the domestic economy.

Algoma's shipments to the U.S. represented 23% of total steel shipments in the second quarter, down from 54% a year earlier and a historical range of about 45% to 55%.

Trump said he paused for three days the new 50% tariff that was set to cover $20 billion worth of Canadian goods ranging from hockey sticks and electronics to plastics and building materials.

The president on social media said the countries had a deal, subject to the finalization of documents. Prime Minister Mark Carney in a statement said that discussions on trade issues had yielded substantial progress, though there remained important work to be done.

The progress reported in negotiations is encouraging, but important work clearly remains to be done, said Marty Warren, national director of the United Steelworkers union, which has called on Canada's government to hold the line to protect workers and jobs in the country. Existing tariffs continue to hurt Canadian steel, aluminum, copper, forestry, automotive and other industries, Warren said.