Steelworkers Say U.S. Owner Pushed Trump Tariffs — Then Used Them to Justify Canadian Layoffs

35,000+ smart investors are already getting financial news, market signals, and macro shifts in the economy that could impact their money next with our FREE weekly newsletter. Get ahead of what the crowd finds out too late. Click Here to Subscribe for FREE.

A fresh clash over Stelco’s future has put an uncomfortable contradiction at the centre of Canada-U.S. trade tensions. The United Steelworkers says Cleveland-Cliffs, the Ohio-based company that bought Stelco in 2024, is now citing the U.S. trade war to justify Canadian layoffs even though its chief executive has been one of the most visible supporters of tougher American steel tariffs.

Stelco plans to indefinitely idle cold-rolled and coated operations at Hamilton Works, affecting hundreds of employees. Cleveland-Cliffs argues the market has changed dramatically and says U.S. tariffs, weak demand and persistent imports into Canada have made parts of the business unsustainable. The dispute is now about more than tariffs: Ottawa is examining whether the layoffs can be reconciled with binding employment commitments attached to the takeover.

Stelco Is Idling Key Hamilton Finishing Operations

Stelco says it will indefinitely idle its cold-rolled and coated operations at Hamilton Works, with the wind-down beginning around October 9. The company says up to 500 employees could be affected across Hamilton and Lake Erie Works in Nanticoke. United Steelworkers Local 1005 president Ron Wells has estimated roughly 350 unionized workers in Hamilton will be laid off, while the union now says about 40 additional layoffs are expected at Lake Erie Works.

The change does not mean Stelco is shutting down Hamilton entirely. Cleveland-Cliffs says the company will continue supplying hot-rolled products and will shift its production mix while concentrating more activity at Lake Erie Works. Some affected Hamilton employees are expected to be offered positions in Nanticoke, although the available jobs may fall short of the number affected. For workers, the uncertainty is immediate: the layoffs are indefinite, leaving families without a clear timetable for returning to their former jobs.

The Layoffs Come Less Than Two Years After the Stelco Takeover

The timing has intensified scrutiny because Cleveland-Cliffs completed its C$3.4-billion acquisition of Stelco in November 2024. When the deal was approved under the Investment Canada Act, Ottawa attached a package of binding five-year undertakings. Among them was a commitment to maintain at least the same number of unionized employees and the vast majority of non-unionized employees who were in place when the transaction was announced.

Cleveland-Cliffs also publicly said Stelco would keep significant operations in Hamilton and Nanticoke, make at least C$60 million in capital investments over three years and maintain significant Canadian employment. At the time, the company described the acquisition as a way to expand its North American footprint while preserving Stelco’s Canadian legacy. Those promises are now central to the dispute. Ottawa and the Steelworkers argue that large indefinite layoffs raise compliance questions; Cleveland-Cliffs maintains that dramatically changed trade conditions give it the legal right to adjust production.

Steelworkers Are Focusing on the Tariff Contradiction

The Steelworkers’ sharpest accusation concerns Cleveland-Cliffs CEO Lourenco Goncalves and his role in U.S. trade policy. In an October 1 statement, the union said Goncalves had publicly pushed the Trump administration for higher tariffs on Canada and helped influence the increase to 50 per cent. The union argues Cleveland-Cliffs should not champion those tariffs in the United States and then invoke the resulting trade disruption while reducing employment in Canada.

That specific claim about influencing the tariff increase comes from the union and should be distinguished from what is independently documented. Cleveland-Cliffs has repeatedly and publicly supported the Trump administration’s Section 232 measures, called 50 per cent steel tariffs important to the U.S. industry and told investors it expects to benefit from the protection for years. The available public records clearly establish the company’s support for the policy; they do not, by themselves, establish precisely how much influence Goncalves had over the White House’s decision to set the rate at 50 per cent.

Cleveland-Cliffs Has Openly Described U.S. Tariffs as a Benefit

Cleveland-Cliffs has been explicit about how tariffs help its American operations. In its 2025 annual report, the company said Trump’s 50 per cent steel tariffs were critical to confronting global overproduction and supporting the U.S. domestic steel market. The company also said it expected to benefit for years from the administration’s manufacturing and trade agenda. Its 2026 shareholder materials credited Section 232 protections, lower imports and domestic-production requirements with helping strengthen its order book.

That position reflects the economics of a producer with a large U.S. manufacturing footprint. Import tariffs make foreign steel more expensive in the American market, potentially giving domestic mills more pricing room. Cleveland-Cliffs has told investors that stronger Section 232 enforcement and U.S. “melted and poured” requirements support demand for domestically produced steel. The company therefore faces two different effects inside the same corporate group: policies it views as supportive of its U.S. assets have reduced the attractiveness of shipping Canadian-made products into the American market.

Stelco Says Demand for Its Finished Steel Has Fallen Sharply

Stelco’s explanation for the layoffs focuses on what happened to demand after the trade relationship deteriorated. In its memo to employees, the company said demand for its cold-rolled and galvanized products in markets it traditionally serves was nearly 25 per cent lower in the second quarter of 2026 than the average quarter in 2024. It said Canadian demand for those products was down about 10 per cent, showing that the pressure was not limited to direct exports to the United States.

The company also points to imported steel entering Canada. Ottawa has tightened tariff-rate quotas and other protections in response to global overcapacity and trade diversion, but Stelco says import volumes remain high enough to prevent it from replacing lost business. Cold-rolled and galvanized steel is used in industries including automotive manufacturing, appliances, machinery and fabricated metals, meaning weaker demand can spread through several supply chains. Stelco has described current market conditions as unsustainable and says idling its finishing operations is necessary to protect the broader company.

Canada Has Limited Room to Absorb Steel That Once Went South

Canada’s steel industry entered the tariff fight with unusually deep exposure to the U.S. market. Federal figures show Canadian steelmakers exported just over half of their annual production in 2024, with more than 90 per cent of those exports going to the United States. That concentration makes a major U.S. tariff particularly disruptive because replacing such a large export market through domestic sales or new overseas customers cannot happen quickly.

The broader manufacturing system is also heavily integrated. Statistics Canada estimates Canadian manufacturers shipped C$324 billion of goods to the United States in 2024, with more than one-quarter of that value reflecting imported U.S. content. Steel and manufactured components can cross the border multiple times before reaching a final customer. When tariffs slow one part of that chain, the consequences can work backward through customer orders, production schedules and employment. That helps explain why the effects are broader than simply adding a tax to steel as it crosses the border.

Ottawa’s Takeover Conditions Give the Government Leverage

The employment undertakings give Ottawa more leverage than it would normally have in a private-sector layoff. Federal approval of the Stelco acquisition explicitly tied the transaction to five-year commitments concerning unionized and non-unionized employment, along with promises covering the Hamilton head office, capital and research spending, pensions and existing collective agreements. Prime Minister Mark Carney has said the government intends to use its available powers to ensure Cleveland-Cliffs meets its obligations.

The Investment Canada Act contains enforcement mechanisms when the government believes an investor has failed to honour an undertaking. The minister can demand that a company remedy a default or explain why it has not breached its commitments. If the issue remains unresolved, Ottawa can seek a court order, and courts can order compliance and impose other remedies. That does not establish that Cleveland-Cliffs has broken the law; determining compliance will depend on the actual undertakings and circumstances. It does mean the dispute can move beyond political criticism into a formal legal process.

Cleveland-Cliffs Says the Trade War Changed the Deal

Cleveland-Cliffs is contesting the idea that its 2024 employment commitments prevent the idling. Goncalves told CBC News that Stelco’s ability to sell steel freely into the United States was an “underlying condition” when Cleveland-Cliffs bought the company. He said he would not have completed the acquisition had he known Canada and the United States would become what he described as enemies in trade, and he maintains the company has the legal right to adjust its Canadian operations.

Goncalves has also rejected the argument that additional government financing would solve the underlying problem. He told CBC that Stelco is not running out of cash and argued that market access, rather than liquidity, is the key issue. That provides an important counterpoint to Ottawa and the union. The emerging legal question is therefore not simply whether tariffs damaged Stelco, but whether changed trade conditions alter or excuse obligations that the federal government says Cleveland-Cliffs accepted as binding conditions of the takeover.

Stelco Is Part of a Much Wider Canadian Steel Problem

The dispute is unfolding against a broader contraction in parts of Canadian steelmaking. Algoma Steel announced more than 1,000 layoffs while accelerating its transition away from blast-furnace operations, and ArcelorMittal Long Products Canada permanently closed its Hamilton wire-drawing mill, affecting 153 employees. Those cases involve their own company-specific circumstances, but together they illustrate how trade barriers, imports, changing technology and industrial demand are reshaping employment across the sector.

For the Steelworkers, the immediate focus is enforcement. The union has asked Industry Minister Mélanie Joly for an emergency meeting and an immediate compliance review of the commitments Cleveland-Cliffs made when Ottawa approved its takeover. Stelco, meanwhile, says it will continue reviewing its operations if market conditions improve. The core tension remains unresolved: Cleveland-Cliffs has publicly praised U.S. tariff protection as an advantage for its American steel business, while its Canadian subsidiary is now pointing to trade disruption created by those barriers as one reason hundreds of Canadian jobs are at risk.

This Options Discord Chat is The Real Deal

While the internet is scoured with trading chat rooms, many of which even charge upwards of thousands of dollars to join, this smaller options trading discord chatroom is the real deal and actually providing valuable trade setups, education, and community without the noise and spam of the larger more expensive rooms. With a incredibly low-cost monthly fee, Options Trading Club (click here to see their reviews) requires an application to join ensuring that every member is dedicated and serious about taking their trading to the next level. If you are looking for a change in your trading strategies, then click here to apply for a membership.