Ottawa Can Win Against Cleveland-Cliffs and Still Lose on Steel Tariffs

The chief executive who owns Canada's best-known steelmaker has said, more or less out loud, that he helped persuade Washington to raise tariffs on steel. Lourenco Goncalves runs Cleveland-Cliffs, which bought Stelco in late 2024, and the tariffs he championed land on the steel his own Canadian mills ship south.

Ottawa may well have grounds to sue. A win could force Cleveland-Cliffs to honour its promises on jobs, investment and Canadian management at Hamilton and Nanticoke. It would leave the tariff exactly where it is. That gap matters well beyond steel: if your business or your wealth depends on trade with the United States, the legal protections you rely on probably cover less of your real risk than you assume.

A promise protects only what it names

When a foreign company buys a significant Canadian business, the Investment Canada Act requires the deal to show a "net benefit" to Canada. The buyer signs binding undertakings, usually about employment, capital spending and keeping Canadians in management, often for a set number of years. Cleveland-Cliffs made those commitments when it paid roughly $3.4 billion for Stelco.

If the owner breaks them, Ottawa can go to court. It has done so before, and over the same assets: in 2009 the federal government sued U.S. Steel over how it was running Stelco.

Look at what those undertakings leave out. Nothing in a typical net benefit agreement stops a parent company from lobbying its own government. Cleveland-Cliffs can argue that pushing for U.S. tariffs is a duty it owes its shareholders, and that as long as the Canadian furnaces keep running and the headcount holds, it has kept its word. That argument may be legally sound. The useful habit for any business owner is to read every contract, guarantee or supplier promise for the risks it never mentions.

The court and the tariff run on separate tracks

According to the Congressional Research Service, Section 232 tariffs on Canadian steel and aluminum have ranged from 10% to 50%. These are national security levies, and CUSMA has not kept them off the table. A Federal Court ruling in Ottawa has no power over a U.S. executive order.

So picture the best case for Canada. The government wins, the undertakings are enforced, and the jobs stay on paper. Meanwhile a 50% levy squeezes the mills' margins, and higher steel costs flow through to builders, fabricators and manufacturers across the country. Lawsuits also move slowly, and these disputes tend to end in quiet renegotiation, because suing a major industrial player from your largest trading partner carries diplomatic weight.

For your own planning, split risk into two piles: the kind you can enforce in court and the kind you simply have to absorb. Tariffs nearly always land in the second pile.

Build the protection you control

The constructive response is to stop waiting for someone else's promise to cover you. If steel or other imported inputs drive your costs, contracts with price adjustment clauses let you pass tariff shocks along instead of eating them. A second supplier, even at a slightly higher price, buys you options when one border tightens. A cash reserve sized to carry several months of thinner margins means a trade spat does not force you to sell assets or borrow on bad terms.

The same thinking applies to a household balance sheet. If your business income, your investment portfolio and your home equity all depend on one industry or one trade relationship, a single tariff decision in Washington can hit all three at once. Spreading that exposure, and arranging credit while your finances look strong rather than after they weaken, gives you room to make calm decisions when the headlines turn.

Ottawa can be right on the law and still watch steel costs climb. Before you count on any promise in your own affairs, ask what it would cost you if the person who made it kept every word and still acted against your interests.