TORONTO, Canada – Prime Minister Mark Carney has challenged Cleveland-Cliffs over layoffs at its Canadian steel subsidiary Stelco, saying the U.S.-based company has binding employment obligations following its 2024 acquisition of the Hamilton steelmaker.
Stelco said it will indefinitely idle its cold-rolled and coated operations at its Hamilton Works facility, a move that could affect up to 500 workers. The company plans to begin winding down those operations on Oct. 9 and concentrate steel production at its Lake Erie Works facility in Nanticoke, Ontario.
The United Steelworkers union has estimated that about 350 steelworkers will be laid off at Hamilton, making the union’s figure lower than Stelco’s broader estimate of employees affected by the restructuring.
Stelco cites tariffs and weaker demand
In a memo to employees, Stelco said U.S. tariffs had significantly reduced the market for its cold-rolled and galvanized products. The company said demand in its traditional markets fell by almost 25% in the second quarter of 2026 compared with the 2024 quarterly average, including a 10% decline in Canada.
Stelco described the shutdown as necessary to address what it characterized as an unsustainable market for cold-rolled and coated products amid continuing trade disruption. The company also said Canadian government measures had reduced imports overall but that import volumes remained high enough to leave a gap in the market.
The layoffs come amid the wider Canada-U.S. trade dispute. Current reporting says U.S. tariffs on Canadian steel have reached 50%, while Canada has imposed retaliatory measures of its own.
Carney points to employment commitments
Carney said the federal government had offered financial assistance intended to help preserve jobs and accused Cleveland-Cliffs of having obligations arising from its purchase of Stelco.
“There’s money on the table from the federal government,” Carney said, adding that the company had made representations and had legal obligations concerning employment. He said Ottawa intended to use its available powers and pursue the matter to the fullest extent of the law.
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The federal government approved Cleveland-Cliffs’ acquisition of Stelco in October 2024 under the Investment Canada Act. The approval included binding five-year undertakings requiring the company to continue employing at least the same number of unionized employees and the vast majority of non-unionized employees employed when the transaction was announced.
The government also required Cleveland-Cliffs to maintain Stelco’s head office in Hamilton, preserve existing collective bargaining agreements and employee benefit and pension commitments, and make significant capital and research-and-development expenditures supporting Stelco’s operations.
Whether the current layoffs breach those commitments has not been established by a court or other adjudicating authority.
Cleveland-Cliffs says production will remain in Canada
Cleveland-Cliffs has said the Hamilton restructuring will not move Stelco’s steel production out of Canada.
The company plans to consolidate production at Lake Erie Works in Nanticoke and expects a significant number of workers affected by the Hamilton idling to be offered employment there. Cleveland-Cliffs has also said overall Canadian steel tonnage will not change as a result of the consolidation.
That position differs from the immediate impact on Hamilton workers, where the company has announced an indefinite idling of cold-rolled and coated operations.
The tariff dispute reaches the steel supply chain
Industry representatives have described the Stelco cuts as part of a broader effect from tariffs moving through Canada’s integrated manufacturing supply chains.
Alan Arcand, chief economist at Canadian Manufacturers and Exporters, said companies using Canadian steel can lose U.S. sales because of tariffs, reducing their production and, in turn, their demand for steel from Canadian producers.
At the same time, Brendan Sweeney of the Pacific Manufacturing Association of Canada said Honda and Toyota continue to produce at relatively steady levels in Canada and remain significant buyers of Canadian steel. His comments indicate that the impact is not uniform across Canadian manufacturing.
The competing explanations do not establish that U.S. tariffs alone caused Stelco’s restructuring. Stelco itself cited tariffs, weak demand and import pressure, while industry observers have identified broader supply-chain and global steel-market factors.
Next steps remain unresolved
The immediate restructuring is scheduled to begin with the Oct. 9 wind-down of Hamilton’s affected operations. The company expects some affected employees to transition to Lake Erie Works, but the final number of Hamilton workers who will lose employment rather than transfer has not been established.
Carney’s threat of legal action introduces a separate question over whether Cleveland-Cliffs’ employment commitments can be enforced in relation to the restructuring. The federal government’s 2024 approval documents establish the commitments, but they do not by themselves establish that Stelco has breached them.
The dispute therefore remains centered on two connected but distinct issues: the commercial impact of the Canada-U.S. trade conflict on Stelco’s operations and the legal obligations attached to Cleveland-Cliffs’ acquisition of the company.
Reporting Credit: Government of Canada, Innovation, Science and Economic Development Canada; Stelco employee memorandum; Cleveland-Cliffs statements; United Steelworkers Local 1005.
