Steel coils sit to cool outside the Stelco plant in Nanticoke, Ont. Photo by Cole Burston/Bloomberg via Getty Images

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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.

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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.

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

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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.

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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.

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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.

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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?”

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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.

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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.

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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.