Good morning. In today\u2019s newsletter, we\u2019re tracking the showdown between Ottawa and the U.S. owner of Stelco, which recently announced hundreds of layoffs despite commitments made as part of its takeover of the Canadian steelmaker.<\/p>\n
Up firstIn the news<\/p>\n
Takeovers: Weston family to buy British retailer Boots<\/a> for US$8.9-billion with Fairfax backing.<\/p>\n Travel: Vancouver airport privatization may be the first to take flight<\/a>.<\/p>\n Retail: Lululemon overhauls leadership team with two new roles<\/a>.<\/p>\n Open this photo in gallery:<\/a><\/p>\n Rolls of coiled coated steel at a Stelco facility in Hamilton.Peter Power\/The Canadian Press<\/p>\n In focusPromises, promises<\/p>\n A lot of assumptions have been challenged over the last couple of years, including the very premise of a promise.<\/p>\n The high-stakes showdown between the federal government and Cleveland-Cliffs, the American steel giant that recently announced layoffs at its Stelco operations in Southern Ontario, is exposing how the U.S. trade war can upend foreign-investment commitments.<\/p>\n To gain Ottawa\u2019s approval of the $3.4-billion takeover of the storied Canadian company in 2024, the American giant had agreed to keep at least the same number of unionized employees<\/a> in Canada for five years, along with the vast majority of non-unionized workers.<\/p>\n When the deal was finalized on Nov. 1, 2024, Cleveland-Cliffs chief executive Lourenco Goncalves said the company was \u201cexcited\u201d<\/a> about how the acquisition would integrate steelmaking across the border and appreciated the \u201cwarm welcome we have received from all government officials in Canada.\u201d<\/p>\n \u2018Beyond my control\u2019<\/p>\n Tomorrow, Cliffs is set to lay off about 500 workers as it idles major Stelco operations in Hamilton and Nanticoke, Ont. The company said in a memo<\/a> obtained by The Globe\u2019s Niall McGee that the move was \u201can unfortunate but necessary action to ensure survival of Stelco\u201d in a challenging and \u201cunsustainable\u201d steel market.<\/p>\n \u201cThe underlying condition of the market changed a lot, and it was beyond my control,\u201d Goncalves later told McGee.<\/p>\n A few days after the takeover was made official, Donald Trump was re-elected president of the United States. Among his wall of protectionist measures, steel has been one of his top priorities. Since taking office, he has raised tariffs on imported steel from zero to 25 per cent and then to 50 per cent, effectively shutting Canadian steelmakers out of their most important export market.<\/p>\n It is a policy supported by none other than Cliff\u2019s Goncalves, who thanked<\/a> the Trump administration on an earnings call shortly after the first wave of tariffs for having the \u201ccourage\u201d to implement them.<\/p>\n The duties would strengthen the U.S. steel industry, he said, but they would also benefit Stelco because Canadian steel prices tend to track the U.S. market.<\/p>\n Flash-forward to today: Cliffs is now pointing to the tariffs as the reason it cannot meet its commitments to Ottawa, saying Trump\u2019s subsequent increase from 25 per cent to 50 per cent made it impossible.<\/p>\n Ottawa\u2019s ultimatum<\/p>\n If you\u2019re wondering how a company can point to the trade policy of its own government as justification for breaking the terms of a multibillion-dollar agreement, you\u2019re not alone.<\/p>\n \u201cThe company made representations, and has legal obligations for employment,\u201d Prime Minister Mark Carney said last week. \u201cWe intend to use all powers that we have, and pursue them to the fullest extent of the law.\u201d<\/p>\n Industry Minister M\u00e9lanie Joly issued an ultimatum<\/a> to the Cleveland-based steelmaker this week: Map out a plan within five business days for complying with its employment guarantees or face potential legal action.<\/p>\n Goncalves said he would fight any legal action from Ottawa and promised that laid-off workers will be called back if the trade war ends soon. <\/p>\n Even if Canada signs a \u201cFortress North America\u201d trade deal with the U.S., as Goncalves is urging the government to do, it\u2019s hard to know exactly when the broader war will end. <\/p>\n In a trading relationship that now seems permanently up for renegotiation, there is always another chance for Washington to demand concessions, and always another opportunity for a U.S. company to say the economics have changed \u2013 to throw up its hands and say: We couldn\u2019t see this coming. Promise!<\/p>\n Charted<\/p>\n Corporate takeovers involving Canadian companies collapsed in the most recent quarter, Jameson Berkow writes<\/a>. Just 401 transactions involving a Canadian buyer or seller were announced during the third quarter, according to a report from LSEG Data & Analytics released Wednesday.<\/p>\n Quoted<\/p>\n How can a reaction be designed to spontaneously create only one of the two mirror images without involving any other chiral molecule? It is this puzzle that this year\u2019s laureates have solved.<\/p>\n \u2014 Heiner Linke, chair of the Nobel Committee for Chemistry<\/p>\n I can\u2019t believe they beat me to it. The Nobel Prize in Chemistry was instead awarded<\/a> to mirror molecule explorers Henri Kagan and Kenso Soai.<\/p>\n Up nextMore files we\u2019re following<\/p>\n Make it fashion: Canadian \u201ceveryday luxury\u201d design house Aritzia reports after markets close.<\/p>\n Make it to work: It\u2019s a light day (at least, so far) of economic events in Canada. Tomorrow\u2019s September jobs report might liven things up.<\/p>\n Make it well: And let\u2019s gel. Wait, Collective Soul is playing shows<\/a> in Ontario this month? I was just looking the other day for my Sony Discman D-E401G with 10-second electronic shock protection.<\/p>\n Morning update<\/p>\n