Cleveland-Cliffs faces Canadian pressure over Stelco layoffs

Cleveland-Cliffs temporarily laid off up to 500 steelworkers at Stelco facilities in Hamilton and Nanticoke, Ontario, on Sept. 28. The company cited elevated U.S. tariffs on galvanized steel as the direct cause for the job cuts, announced during an earnings call.

Lourenco Goncalves, chief executive of Cleveland-Cliffs, blamed Canada’s government for the layoffs. He argued that stronger federal action on trade could restore all the jobs. The federal government immediately warned the company that the cuts violate legally binding job protection commitments made under the Investment Canada Act.

Company cites trade and market challenges

Goncalves argued that U.S. tariffs and an 'avalanche of imports' have undermined Stelco’s competitiveness in galvanized steel. This is despite the operation recently becoming profitable. He stated that Stelco's third quarter was its strongest since Cleveland-Cliffs acquired the company for $2.8 billion in 2024.

Canada’s domestic market for galvanized steel is not big enough for two major producers, Stelco and ArcelorMittal Dofasco, plus cheap imports, according to Goncalves. He said enhanced tariff-rate quotas implemented by Ottawa in December 2025 and updated in June worked for hot-rolled steel but failed for galvanized products. Goncalves and other steel producers advised the government on steps to address the issue but were not successful. He had warned of negative outcomes from inaction last quarter.

Lourenco Goncalves said: 'The last piece of the puzzle to be addressed by the Canadian government is galvanized steel.' He stated that if Canada unilaterally blocked or severely reduced galvanized steel imports, Stelco could immediately bring back all temporarily laid-off workers. Resolving the issue would allow a restart of production at the galvanized department in Hamilton.

Government warns of legal action over job commitments

Canada's Minister of Industry, Melanie Joly, issued a sharp warning following the layoff announcements. She stated that Cleveland-Cliffs made a pledge to maintain at least the same number of unionized workers in Canada for five years as part of the Stelco acquisition. The federal government alleges the layoffs breach these job commitments.

Joly warned that non-compliance could lead to legal action or forced divestment of the Canadian operations. She posted on social media platform X that the government would use every tool at its disposal to keep the strategic capacity operational. Joly said Cleveland-Cliffs must keep jobs in Canada or face selling their Canadian assets. She stated that 'everything is on the table,' including financial penalties.

Goncalves called Joly's comments 'bullying and harassment.' He said the company had not violated the deal made with former industry minister Francois-Philippe Champagne, who approved the purchase. Goncalves compared potential Canadian government action to Hugo Chavez's nationalization of Venezuela's steel industry in 2008, though he added he does not believe Canada is Venezuela. The company is prepared to go to court to defend its position, he said.

The CEO expressed frustration with the government's response. Goncalves said the company did not expect to be treated like a pariah less than two years after acquiring Stelco. He argued that Canada countered the layoff announcement with 'last-minute' financial support that Stelco does not need, as the company is having a great year and making money. Resolving the galvanized steel issue would allow bringing workers back and restarting production at the galvanized department in Hamilton, Ontario.