Terence Corcoran: Stelco caught in an unwinnable trade war

One can only sympathize with the 500 members of the United Steelworkers facing temporary layoffs at the Stelco plant in Hamilton, Ont. Even though employment benefits remain in place, the immediate loss of income is understandably painful, which helps explain the broad political support the workers are receiving.

But it is also possible to have some appreciation of the political burden now being borne by executives at Stelco and its U.S. parent company, Ohio-based Cleveland-Cliffs Inc. Since the layoffs were announced, the two corporations have been the target of a national shaming campaign that starts at the office of Prime Minister Mark Carney and continues down through his Industry Minister, Mélanie Joly, Conservative Leader Pierre Poilievre, NDP Leader Avi Lewis, Ontario Premier Doug Ford, union executives and media commentators.

The ultimate threat surrounding the layoffs is that Ottawa should, could or might nationalize Stelco. Forget that.

Also to be ignored is the threat of legal action by Ottawa against Stelco. Carney has accused Stelco of betraying its workers and says his government intends “to use all powers that we have and pursue them to the full extent of the law.” Joly has repeated the threat, agreeing with Carney that Cleveland-Cliffs was breaking the 2024 takeover agreement that allowed the U.S. company to conclude a $3.85-billion takeover of Stelco — an agreement that she and Carney claim prohibits any layoffs.

Whether that is legally true or not does not matter. Threatening to take the company into a prolonged court battle over an immediate crisis is as meaningless and impractical as nationalization, and amounts to nothing more than a distraction from the real issue: the unresolved (and unresolvable?) trade war.

The real source of the layoff conflict — as I see it, anyway — is a fundamental clash of trade objectives between Lourenco Goncalves, the CEO of Cleveland-Cliffs, and Prime Minister Carney. Their differing perspectives on how the steel industry should be set up in North America is the main reason behind the steelworker layoffs.

Goncalves, a Brazilian who has led steel companies in his home country as well as the United States, has been building Cleveland-Cliffs for more than a decade. The company rose to major takeover fame when he tried to take over U.S. Steel for US$7.2 billion in 2023, a move that earned him a Fortune magazine headline: “The Elon Musk of steel?”

That takeover failed, but less than a year later Goncalves made a $3.4-billion offer for Stelco, which was approved by Ottawa in October 2024, following an Investment Canada Act agreement that included a commitment to “employ at least the same number of unionized employees” and the “vast majority” of non-unionized employees for the next five years.

Goncalves boasted that the takeover of Stelco would prove an instant financial success. “Stelco is a plug-and-play asset for Cleveland-Cliffs,” he said. The Hamilton-based operation will be “the lowest cost and highest EBITDA margin flat-rolled asset in our entire footprint.” The takeover closed on Nov. 1, 2024, after Ottawa released a note on the investment act provisions.

Five days later, on Nov. 5, Trump won re-election and within five months, on March 12, 2025, he ordered his first 25 per cent tariff on steel imports, boosting the rate to 50 per cent a few months later.

Did Goncalves and associates know these tariffs were coming on a Canadian steel company they had just taken over? Maybe, or maybe not. It is quite possible he was aware of the tariff plan, but had misjudged the consequences as they related to Canada’s existing free trade deal — the Canada-United States-Mexico Agreement (CUSMA). Perhaps Goncalves still believed in the prospect of a renewed CUSMA that would create a new North American trade deal, one the steel executive has promoted over the years: Fortress North America.

In comments a few days ago, Goncalves renewed his advocacy for a North American trade deal that would involve joint tariff protection against steel imports. The objective, he said, would be “To protect the Canadian steel industry the same way we’re protecting the American steel industry, and the consequences are all positive.”

During an investor conference call with Cleveland-Cliffs investors last April, Goncalves named Canada as “the one piece still missing” in his North American plan. He claimed Canada is still oversupplied with steel from countries that are no longer able to dump their excess capacity into the United States.

Goncalves then hit the ball over to Carney. “We truly believe the Canadian government is honest about defending Canadian jobs and Canadian steelworkers,” he said, adding: “We fully expect that Fortress North America can be and will be implemented by Canada because that’s totally within their own power. Canada does not depend on anyone else to do so, and Canadian jobs are the ones at stake.” (See NOTA BENE below).

But as everybody knows, Canada under Carney has already abandoned the idea of North America as an economic union. The fortress will stop at the border as Canada shifts its economic focus towards the middle powers around the world, and some major emerging powers such as China and India.

Chinese electric vehicles are coming to Canada. A Canadian trade mission met this week in India, which coincidentally unveiled plans to become a major global steel-making powerhouse.  Later this month, Carney will host European nations at an EU/Canada summit in Montreal.

This is not a legal layoff issue. Stelco and its workers are caught in an unwinnable trade war.

Excerpt from comments by Cleveland-Cliffs CEO Lourenco Goncalves at an investor earnings call, April 20, 2026.

Now to the good news. Our order book is full … Production schedules are tight. And lead times have moved out. Historically, pricing changes took about a month to flow through our realized numbers …This market strength is driven by what is happening on the trade front. Steel imports into the United States are at their lowest levels since 2009. By now, it’s clear that Section 232 works, the melted and poured mandate works, and the enforcement works. Along those lines, we are very encouraged by the recent changes in how derivative product tariffs are being enforced. Distribution transformers were added, which is exactly the right outcome. The Trump administration has given the domestic steel industry what we needed and have been asking for. Union jobs are being protected, domestic supply chains are more resilient, and mills are running at higher utilization with real predictability.

The one piece still missing is Canada. There is a robust domestic market in Canada for our Canadian subsidiary, Stelco, to sell steel into, but the Canadian market is still oversupplied with steel from countries that are no longer able to dump their excess capacity into the United States. Because of that, they dump steel in Canada. That said, we are confident that Canada will ultimately get to the right place and enhance its own national security defences against the negative impact of foreign steel causing the destruction of Canadian companies. We truly believe the Canadian government is honest about defending Canadian jobs and Canadian steelworkers. We fully expect that Fortress North America can be and will be implemented by Canada because that’s totally within their own power. Canada does not depend on anyone else to do so, and Canadian jobs are the ones at stake.