Canada Threatens Cleveland-Cliffs With Forced Sale of Assets Over Layoff Plans — Update

By Paul Vieira and Robb M. Stewart

OTTAWA--Canada's federal government formally demanded on Thursday that steel maker Cleveland-Cliffs abandon plans to lay off Canadian workers, giving the company 15 days to comply or face the risk of hefty fines or a forced sale of the company's Canadian assets.

Canadian Industry Minister Melanie Joly said the company's layoff plans, affecting workers at two Ontario plants, would violate commitments the U.S. company made when it secured Canadian approval for its 2024 takeover of Stelco.

"No act of God or change in market conditions can relieve Cleveland-Cliffs of the commitments it made to Canada. Those commitments are not optional," Joly said in a statement posted on the social-media platform X.

Cliffs Chief Executive Lourenco Goncalves told The Wall Street Journal last week that the company hasn't breached the law and that a temporary reduction in headcount is needed as it refocuses its operations to counter the pressure on the industry from U.S. tariffs.

The company didn't immediately respond to a request for comment regarding Canada's formal threat.

The row between Canada and Cliffs is another flash point in the roughly two-year trade feud between Washington and Ottawa that started with President Trump's return to office. Canada remains the only Group of Seven country with a pact with the U.S. on tariff relief, and talks between cross-border officials collapsed unexpectedly in August with both sides blaming the other for issuing last-minute demands.

Canada is among America's biggest commercial partners, with two-way trade between the neighbors ranking third behind the European Union and Mexico. The U.S. is by far Canada's top export market for steel, according to state-backed financier Export Development Canada, and the country's steel industry has faced financial strain from Trump's 50% tariff on foreign steel.

This week, Prime Minister Mark Carney unveiled another new round of financial relief for the steel industry, with over $3 billion of financing available to help domestic mills upgrade operations to produce goods for the domestic and non-U.S. markets.

In the formal letter to Cliffs, Joly said the company has agreed as part of its Stelco takeover to ensure annual employment of unionized workers would be no lower than 1,766, or the average annual full-time equivalent level ended on June 30, 2024. Joly said the company made a similar promise regarding salaried employees.

Cliffs notified Canadian officials in early September about its intent to lay off up to 500 workers at two plants in Ontario, Joly said in the letter. Cliffs said the company shouldn't be subject to penalties for violating its commitments, arguing that changes in market conditions--including Trump administration tariffs--were outside Cliffs' control.

Joly, in her letter, rejected the company's claim, saying CEO Goncalves has been at the forefront advocating for, and applauding, Trump's tariff policy on steel. The CEO "advocated for the very tariffs that Cliffs is now relying on as a basis for non-compliance with the undertakings."

Goncalves told the Journal last week that the layoffs are necessary because of weakness in demand for galvanized steel products. The CEO said he has been made to feel like an enemy in Canada because of his support for Trump's trade policy, adding that Carney should shoulder some of the blame for the domestic steel sector's woes due to his decision to walk away from trade talks with Washington.

Carney said he spoke with Trump on Wednesday regarding trade and geopolitical issues, and added that officials stand ready to resume talks on a trade pact that provides tariff relief for the country's steel sector.

Write to Paul Vieira at paul.vieira@wsj.com

(END) Dow Jones Newswires

October 22, 2026 11:52 ET (15:52 GMT)