OTTAWA , The federal government has formally put the U.S. owner of Hamilton steelmaker Stelco on a 15-day clock to reverse recent layoffs or face legal proceedings under the Investment Canada Act, elevating a months-long dispute into a potential court fight that could include fines or a forced divestiture of Canadian assets. In an extensive demand letter delivered to Cleveland-Cliffs, Industry Minister Melanie Joly says the company has failed to honour multiple binding undertakings it made to Ottawa when the Ohio-based steel producer completed its takeover of Stelco in 2024. Among the commitments Joly cites are guarantees on employment levels for unionized staff and other operational obligations intended to protect jobs and Canadian capacity after the acquisition. The federal move follows a string of events this autumn. Stelco announced plans to temporarily idle certain operations and issue layoff notices that could affect as many as 500 workers in southern Ontario. The company has defended the cuts as a short-term operational response to market disruptions, including higher U.S. tariffs and shifts in regional demand, while Cleveland-Cliffs executives have said the measures are temporary and intended to preserve longer term viability. Ottawa’s response signals that the government does not accept market conditions alone as justification for breaking commitments made as a condition of foreign investment approval. Joly’s letter asks Cleveland-Cliffs to either rescind the layoffs or provide detailed evidence showing compliance with the undertakings, including month-by-month employment data stretching back to November 2023. Why the government intervened The Investment Canada Act allows Ottawa to impose conditions on foreign takeovers and to enforce those conditions when the buyer’s actions threaten economic or strategic interests. In this case, the federal government has argued the undertakings signed in 2024 were designed to protect Canadian jobs by requiring the maintenance of a specified level of unionized and other employees for a defined period. Joly’s ultimatum frames the matter as more than a labour dispute. The minister wrote that changing market conditions or business choices do not suspend legally binding commitments. She warned Cleveland-Cliffs that if the company does not comply, the government is prepared to seek judicial enforcement, which could include orders to restore employment levels, monetary penalties, or in an extreme outcome, the divestiture of Canadian assets the company acquired under the previous agreement. Company stance and industry reaction Cleveland-Cliffs and Stelco have pushed back, saying temporary layoffs are lawful and consistent with standard commercial practice during periods of disruption. Company statements note that certain idling of production is aimed at managing costs while broader trade tensions and tariffs between Canada and the United States reshape regional supply and demand. Union leaders and local elected officials have urged Ottawa to act. The union representing many Stelco workers described the layoffs as deeply disruptive for families and communities that depend on steel sector jobs. Labour advocates say enforcement of investment commitments is essential to maintain trust that foreign acquisitions will not weaken worker protections in Canada. Broader economic and political implications The standoff comes at a politically sensitive time. Ottawa and Washington have been wrestling with crossborder trade frictions this year, and Canadian officials say U.S. tariff measures have complicated the operations of manufacturers that serve both markets. At the same time, the federal government has sought to demonstrate that investment approvals will not be a route to asset stripping or job losses when Canadian interests are at stake. Legal experts say the core question for Ottawa’s case will be whether a temporary layoff falls within the scope of the employment protections in the 2024 undertaking. If the government can show that commitments were breached, courts have the power to order remedies, but such litigation can be protracted and legally complex. What happens next Cleveland-Cliffs has 15 days to respond to Joly’s demand. Government officials said they expect a detailed reply that either reverses the layoffs or provides the data and legal rationale the minister requested. If Ottawa determines the response is unsatisfactory, the next step could be an application to the Federal Court to enforce the Investment Canada Act undertakings. For workers and communities in Hamilton and across the region, the outcome will determine whether the layoffs remain in effect and how the federal government will police future foreign investments. For Ottawa, the case is a test of the enforceability of conditions it imposes on purchases of strategic Canadian companies. The federal ultimatum underscores a broader policy tension in Canada between attracting inbound investment and safeguarding employment and industrial capacity. Legal proceedings, if launched, would likely set a precedent for how Ottawa handles future disputes over commitments tied to major foreign acquisitions.