Canada Threatens Legal Action as Cleveland-Cliffs Idles Stelco Plant Amid Trade War
Cleveland-Cliffs plans to indefinitely idle its Hamilton steel plant and lay off up to 500 workers, prompting Canadian Industry Minister Mélanie Joly to threaten legal action under the Investment Canada Act.
The Canada-U.S. trade war has intensified around Stelco Holdings Inc., a Hamilton-based steelmaker acquired by U.S. firm Cleveland-Cliffs Inc. for $3.4 billion in 2024. On Sept. 28, Cleveland-Cliffs announced it would indefinitely idle its Hamilton plant and lay off hundreds of workers. The company plans to halt production at Hamilton Works starting Oct. 9, with layoffs affecting up to 500 workers across Hamilton and Nanticoke.
Canadian Industry Minister Mélanie Joly threatened legal action if Stelco does not preserve Ontario jobs, citing commitments made under the Investment Canada Act when Cleveland-Cliffs acquired the company. Stelco was originally incorporated in 1910 as the Steel Company of Canada through an amalgamation of five iron and steel companies.
The dispute centers on conflicting claims about the cause of the shutdown. Cleveland-Cliffs argues the layoffs are due to external tariff factors beyond its control. In 2025, U.S. President Donald Trump raised levies on imported steel to 25 per cent and then 50 per cent. However, Cleveland-Cliffs CEO Lourenco Goncalves stated he influenced President Trump to increase U.S. steel tariffs from 25 per cent to 50 per cent. The Canadian government contends that because the company supported and influenced these tariffs, they cannot be considered "beyond control" under the Investment Canada Act.
Legal experts note that courts are unlikely to order specific performance, such as forcing the company to rehire workers, but may consider divestiture or monetary penalties up to $10,000 a day. The standoff threatens disruption to automotive supply chains relying on cross-border steel movement and raises the possibility of a forced sale or nationalization of Stelco assets.