Tariffied! Cleveland-Cliffs Not Immune To Market Meltdown

Cleveland-Cliffs Inc. (NYSE: CLF) is an American steel company.

It’s a vertically-integrated business that mines iron ore in Michigan and Minnesota, then finishes it into steel that gets cut and stamped into all sorts of different car parts, sometimes by Cleveland-Cliffs themselves at their tooling and stamping facilities, and other times by their customers who then sell them to car companies or put them in cars.

It sells all sorts of other stuff, and seems excited about growth in its electrical steel business, which includes various electrical motor components as well as steel plates used in powerline infrastructure and solar installations. But 66% of its business is in cold-rolled, hot-rolled and coated steel used by the auto industry.

Cleveland Cliffs is the type of American business that one might expect to benefit from US tariffs on imported steel, and Cleveland-Cliffs thinks that too. It’s been agitating for tariffs for quite some time.

Its annual report says that the tariffs will level the playing field against foreign steel dumpers that are being “very unfair…”

It goes on to point out that the US is the only steel producing country that consumes less steel than it produces.

And on March 12, 2025, Cleveland-Cliffs got its way. President Trump imposed 25% tariffs on all steel and aluminum imports to the US of all origins, including Canada, home of Cleveland-Cliffs’ subsidiary Stelco, which it bought in 2024.

The way Cleveland-Cliffs sees it, the 34 million tons of steel that were imported in 2024 were 34 million tons of sales that it didn’t get a crack at, and tariffs on imported steel will help American auto companies remember whose side they’re on.

But it isn’t working out that way.

The economic uncertainty caused by the Trump tariffs have caused analysts to forecast a weak auto market, and the car companies are adjusting for that by ordering less cold-rolled steel, which is hurting Cleveland-Cliffs, at least in the short term.

On March 28, Cleveland Cliffs announced it would be laying off 600 workers as it idles its plant in Dearborn, Michigan, and another 630 workers at two iron mines in Minnesota and Virginia. 

Cleveland Cliffs’ Stelco facility in Hamilton, ON has been spared from layoffs so far, but that might only be because the 2024 acquisition agreement includes a clause that prohibits the company from reducing the workforce. 

About 200 workers at Stelco’s Canadian competitors have already been laid off as Canada responds to US tariffs.

Cleveland Cliffs says that the layoffs will help keep them competitive in the long term, and hope to resume production in Dearborn once the tariffs have done their job and auto production is “re-shored”.

The market isn’t so sure.

The whole American steel stock universe has had a bad year, but Cleveland-Cliffs has performed exceptionally poorly in the past 12 months, losing 65.44% over the period.

Cliffs’ stock is presently bumping along in the mid $7 range, a 52 week low that puts it well under its larger, US-based peers in all valuation metrics.

According to the deck it made about the Stelco merger, the company ships the second-most on-continent tonnage of all North American steel producers, and it has the lowest market cap by far.

It could be said that Cleveland-Cliffs offers good value at this price by every metric except for cash flow. It’s unquestionably a growth story for anyone who believes in a resurgence of American industry that sentiment has yet to come around on.

Tariffs dominated the news last week as President Trump applied them broadly, then reduced them for some cases, doubled down on the tariffs to China, then backed them off for electronics.

As we write this, the 25% steel and aluminium tariffs stand, as do 10% tariffs across the board on all products, a 145% tariff on products from China, with an exemption for electronics…

…which are the single largest Chinese export to the US, representing $124.5 billion of the $501 billion worth of goods that China sent to the US in 2023. Steel products were $13.2 billion, less than half of the top line sales of the largest American steel producer Nucor Corp. (NYSE: NUE) in that same period ($34.7 billion). CLF did $21.9 billion in sales in 2023.

The most recent development in the US’ still-developing tariff plan was President Trump’s Sunday post on Truth Social asserting that the exemption did not get China ‘off the hook’ for electronics tariffs, but rather put them in ‘another bucket’, and subject to a 20% tariff. The White House says that the details will be available Monday.

Electronics being key components of modern vehicles, and China being far and away the largest exporter of electronics to the United States, investors might want to see how these tariffs affect auto costs before they start backing the great re-shoring of US auto manufacturing.

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Information for this story was found via the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.