Canada’s government is preparing for a legal fight with Cleveland-Cliffs, the US owner of steelmaker Stelco, over job cuts the company links to US tariffs. Stelco said on 28 September that it would indefinitely idle cold-rolled and coated steel operations at its Hamilton, Ontario plant and concentrate production at its Lake Erie works in Nanticoke, affecting up to 500 workers.
Speaking in Vancouver on 29 September, Prime Minister Mark Carney said the workers had been “betrayed by the company” and that Ottawa would pursue its legal options in full. He said the government had offered financial help to preserve jobs.
Promises made for a takeover
Cleveland-Cliffs bought Stelco in 2024 for C$3.4 billion (about US$2.4 billion). Canada approved the deal under the Investment Canada Act on condition that the company meet legally binding five-year commitments, including keeping at least as many unionised employees as when the deal was announced in July 2024, according to HCAMag. Sources told Global News that Ottawa had offered bridge financing, loans and access to new markets, which the company declined.
The company’s case
Chief executive Lourenco Goncalves has argued that the trade war changed the basis of those commitments, saying free sales to US buyers were an underlying condition of the deal and that Canada has no domestic market for the galvanised steel Hamilton produces. A Stelco memo said demand in its traditional markets fell almost 25% in the second quarter from the 2024 quarterly average. Goncalves, who has praised the 50% US tariffs on steel, told Bloomberg the dispute would be resolved in court.
Ottawa has been here before: in 2009 it sued U.S. Steel over broken promises tied to its 2007 purchase of Stelco, dropping the case after the company agreed to keep both plants running until 2015 and invest more.
The case will test whether foreign-investment undertakings still bind when a trade war rewrites the economics behind them.
What to watch
- Whether Ottawa files suit under the Investment Canada Act, and when.
- Whether any US–Canada tariff relief changes Cleveland-Cliffs’ plans for Hamilton.
