The steel jobs may never come back. Ottawa should consider nationalizing Stelco

Nicolas Lamp is an associate professor at the faculty of law at Queen’s University.

Cleveland-Cliffs Inc. CLF-N has said it would lay off of up to 500 steelworkers at the Stelco plant in Hamilton and Lake Erie Works site in Nanticoke, Ont.

As Canadians digest the devastating news, it’s a natural reaction to hope that what some refer to as the “trade dispute” between the U.S. and Canada will soon come to an end, so that such job losses can be averted.

Even Cliffs chief executive Lourenco Goncalves says as much, saying that if a deal is reached, the company would recall all laid off workers.

Cleveland-Cliffs CEO questions logic of Ottawa potentially suing over Stelco layoffs

However, what’s happening between Canada and the U.S. is not a traditional trade dispute, where the two parties disagree about whether one of them is playing by the rules. Instead, what triggered the trade war was an attempt by the U.S. to unilaterally change the rules.

The Trump administration seeks to bring manufacturing jobs back to the U.S. and therefore no longer wants to provide the duty-free access to the U.S. market that Canadian industry depends on. It could not care less that this is a radical departure from decades of U.S. trade policy and inconsistent with its international trade commitments.

There is thus no “dispute” in the narrow sense that could be resolved by knocking heads together or through some sort of international mediation or dispute settlement. Canada and the U.S. want fundamentally irreconcilable things. Canada wants to keep its manufacturing jobs; the U.S. wants those jobs in the U.S., and if that means the deindustrialization of Canada, so be it. The steel workers in Hamilton are thus not collateral damage in the trade war; they are the target.

Fortunately, this is not the case for all the trade barriers the U.S. is currently imposing. The most recent tariffs and import bans are retaliatory in nature, and they will come off when Canada and the U.S. eventually reach a settlement. However, that settlement is unlikely to bring relief to the steelworkers in Hamilton because the steel tariffs are not retaliatory; they are a key element of the U.S.’s new trade order.

What can the Canadian government do? First, it needs to decide what is at stake in Hamilton. If the primary concern is the welfare of the workers and their families, the government should use the funds it has offered to keep the workers employed to instead help them retrain and potentially relocate to other parts of Canada where their skills are in need, as difficult and painful as that will often be.

If, however, the government decides that the steel industry is of strategic importance, that the workers are being “betrayed” by their Trump-supporting CEO and would fare better under more sympathetic management, it could nationalize the company and put Canadian management in charge, as the U.K. government as recently done with British Steel.

The caveats are obvious. It’s unclear whether the Canadian steel industry has a future without access to the U.S. market, there is massive steel overcapacity globally and the financial commitment could be enormous.

The government has to carefully weigh different policy objectives – national security and resilience, the jobs and expertise at stake, the affordability of steel for steel-using businesses, and the most efficient use of public funds. But these are times of fundamental transformation, and no idea should be off the table.