Tariffs Can't Stop the Slide: Cleveland-Cliffs Slashes Capacity Despite Steel Duties

Despite U.S. steel tariffs designed to protect domestic producers, Cleveland-Cliffs Inc. (NYSE: CLF), the nation’s leading flat-rolled steel supplier to automakers, is facing deep financial losses and has announced major restructuring measures.

In Q1 2025, the company reported a net loss of $483 million, marking its third straight quarterly deficit. Revenue dropped 11% year-over-year to $4.6 billion, while adjusted EBITDA reached negative $174 million—worse than market expectations.

Major Cost-Cutting Measures

To mitigate the downturn, Cleveland-Cliffs will:

• Close or idle six facilities, including three specialty steel plants and two iron ore mines.

• Cancel a planned transformer steel expansion in West Virginia.

• Cut 2,000 jobs and reduce capital spending further.

• Aim to save over $300 million annually.

These moves reflect weakening demand across several downstream industries that rely on flat-rolled steel—not only in automotive, but also in metal packaging sectors such as tinplate production for food cans, cosmetic tins, and custom tin packaging.

Trade Strategy Under Pressure

CEO Lourenco Goncalves remains committed to the administration’s recent auto tariffs, effective April 3, which tax all imported vehicles and parts. He believes this will eventually drive up domestic demand for high-quality coated steels used in vehicles and packaging alike.

However, with the North American car market still sluggish, demand from other sectors—including tin can manufacturing and printed tin boxes for consumer goods—is also under strain.

Cross-Border Headwinds

Last year, Cleveland-Cliffs acquired Canadian steelmaker Stelco for $2.5 billion to expand its automotive and packaging steel footprint. But the newly imposed 25% tariff on Canadian steel, effective May 1, has sharply restricted Stelco’s U.S. shipments—including its tinplate exports used in tin can and aerosol packaging—undermining the strategic value of the deal.

“The Canadian tariff was not part of our plan,” said Goncalves.

Looking Forward

Despite short-term challenges, Cleveland-Cliffs forecasts a gradual recovery. While auto manufacturing remains the primary focus, niche segments such as eco-friendly tinplate packaging may offer new growth opportunities—especially as global brands shift to recyclable tin containers to meet sustainability goals.

Still, analysts caution that ongoing trade tensions, retaliatory tariffs from allies, and higher input costs could hinder the intended long-term benefits. For Cleveland-Cliffs, tariffs offer protection—but not a cure—for the broader slowdown affecting both the steel and tin packaging supply chains.