Stelco Holdings Inc. is laying off up to 500 workers at its Hamilton and Lake Erie facilities and indefinitely idling the Hamilton plant, a decision the company calls "unfortunate but necessary" for its survival as U.S. tariffs collapse demand for its cold-rolled and galvanized steel.

The cuts announced Monday follow more than 1,000 planned job reductions at Algoma Steel in Sault Ste. Marie and the closure of ArcelorMittal's Hamilton wire-drawing mill — a string of tariff-linked layoffs across Ontario's steel belt.

The demand damage is measurable. Stelco said demand for its products fell nearly 25% in the second quarter compared with the 2024 quarterly average, including a 10% decline in Canadian demand. Ottawa's federal measures have reduced imports, but volumes remain too high to close the market gap created by trade tensions, the company said.

How the dominoes fall

Alan Arcand, chief economist at Canadian Manufacturers and Exporters, said the layoffs show how tariffs work through highly integrated North American supply chains rather than stopping at the border. Manufacturers that use steel are losing U.S. sales and cutting production, which then reduces the volume of steel they buy from Canadian producers.

"Supply chains have been optimized on the assumption that we would have free trade with the U.S. and you yank that away suddenly without warning and these are the consequences," Arcand said. "You have impacts within the firm being directly hit by the tariff and the firms within the broader supply chain."

The exposure is broad. End users of Stelco's coated products include automotive and parts manufacturers, machinery and fabricated metal producers, appliance makers, and construction and electrical equipment manufacturers. Those sectors face U.S. tariffs of up to 50% on steel-intensive and derivative products, while automakers confront separate trade barriers that weigh on exports and production.

Ottawa pushes back

Prime Minister Mark Carney told a news conference Tuesday that workers have been "betrayed by the company," pointing to federal support already on the table and Stelco's legal employment obligations. "We intend to use all powers that we have and pursue them to the fullest extent of the law," he said.

Carney noted the situation stems from U.S. tariffs and from the ultimate owner of Stelco: "The CEO of Cleveland-Cliffs applauded (U.S. President Donald Trump) for putting those tariffs on." Last year, Ottawa and the Ontario government provided loan assistance to Algoma Steel Group Inc. to help reorient its business amid the tariff regime.

The price squeeze

Ron Wells, president of United Steelworkers Local 1005, which represents Hamilton workers, said Cleveland-Cliffs chief executive Lourenco Goncalves told a recent earnings call that coated steel prices in Canada are significantly lower than in the United States. Goncalves blames Canada's decision not to tariff steel imported into Canada, which drives down the price. "They're claiming they can't make any money selling coated products," Wells said.

Arcand pointed to structural overproduction: "There's a lot more steel being produced than consumed. It's mainly a China story and that's been a long-running issue." He said the government needs to keep monitoring import volumes and adjust anti-dumping measures as needed.

Automakers hold steady — for now

Not every major buyer is pulling back. Brendan Sweeney, president and chief executive of the Pacific Manufacturing Association of Canada — launched by Honda and Toyota last April — said both automakers are producing at steady levels and continue to buy significant volumes of Canadian steel, suggesting Stelco's domestic weakness may come from other manufacturers or different parts of the auto sector.

"Production is not down," Sweeney said. "Production is pretty stable despite the tariffs." He added that Honda and Toyota rank among the top consumers of Canadian-made steel from southern Ontario and "it's important for us to have steel mills around." On the Stelco announcement specifically, he said: "We don't see an immediate impact on our operations … I don't know what the lasting effects are going to be."

Consolidation at Nanticoke

Stelco will concentrate production at its Lake Erie Works in Nanticoke, Ont., though parent Cleveland-Cliffs — which acquired Stelco in 2024 — said overall steel tonnage will not be affected. The company expects a significant number of affected Hamilton employees will be offered jobs at Lake Erie Works.

Wells said the union wants the tariff dispute settled. "We're hoping this trade situation resolves itself so our members can get back to work."

With Hamilton dark indefinitely, import volumes still above what federal measures can offset, and Washington showing no sign of easing the 50% tariff wall on steel-intensive goods, shippers and manufacturers tied to southern Ontario's steel supply chain should plan for continued consolidation and constrained domestic supply rather than a quick rebound.