Dive Brief:
- Global tariffs and continuing weak production levels in the automotive sector impacted Cleveland-Cliffs’ revenue in 2025, which dropped about 3% year over year to $18.6 billion, according to an earnings report on Monday.
- The steel maker posted a net loss of $1.4 billion last year, a 100% decline from 2024. Meanwhile, steel shipment volumes increased 4.1% compared to last year to 16.2 million tons, according to the earnings release.
- Looking ahead, the company expects to recover in 2026 as the issues have been “resolved or clearly improving,” President and CEO Lourenco Goncalves said during an earnings call on Monday. “We have already secured more business from our automotive clients, and that will show throughout 2026 as the OEMs reassure production back to the United States,” he said.
Dive Insight:
Despite the Trump administration valuing “the importance of preserving and growing American manufacturing,” Cleveland-Cliffs was still exposed to a significant amount of steel tariffs that harmed the domestic market, Lourenco said.
The duties created a demand gap that adversely affected the company’s steel shipments and asset utilization, he added.
Additionally, Cleveland-Cliffs’ finances were impacted by a five-year steel slab supply contract that became “value destructive” in its final year, Goncalves said.
The agreement was in connection with Cleveland-Cliffs’ acquisition of ArcelorMittal USA in 2020 and had represented about 10% of the steelmaker’s sales volume, according to an October 2025 securities filing.
The contract, which concluded in December, became unprofitable after President Donald Trump imposed 50% tariffs on Brazilian goods, including steel, which raised prices.
U.S. and Canada trade relations were another wrench in Cleveland-Cliffs’ finances, particularly the Canadian government, Lourenco added. The country imposed a 25% tariff on steel and aluminum imports last year in response to the U.S.’s 25% tariff on Canadian goods, directly affecting Cleveland-Cliffs’ subsidiary, Stelco.
The company acquired Canada-based Stelco in November 2024 and immediately moved the subsidiary out of the U.S. market to have it focus its output on the Canadian market, Lourenco said.
He added that the redirection was not driven by policy change, but by the best interests of its shareholders and employees in both markets.
“Even the all-surprising change in Canada relations with the U.S. should not have affected this strategy at all, but that’s not how it played out,” Lourenco said.
The CEO and others have urged the Canadian government to change its policy to stabilize the steel market over the past year. In December, the Canadian government announced new measures to protect its steel industry, including reducing tariff-rate quota levels to 20% for non-free trade agreement partners and 75% for non-Canada-United States-Mexico Agreement non-trade partners, effective Dec. 26, 2025.
“While still insufficient and limited in scope, the restrictions implemented were at least able to stop the bleeding,” Lourenco said. “As a result, we have seen Canadian pricing and shipments improved in the last month.”
The company has taken steps in response to the challenging conditions, including laying off 3,500 workers and selling idle mills and certain assets to reduce its overall debt and streamline operations.
Celso Goncalves, executive VP, CFO and Lourenco’s son, added on the earnings call that the company has closed on its ferrous processing and trading facility in Florida. The steel producer has also signed contracts for the remaining properties, which Celso expects will bring $425 million.
Asset sale processes also continue, which should bring in more cash throughout 2026, helping Cleveland-Cliffs return to generating healthy cash flow.
Additionally, the company signed a memorandum of agreement with South Korea-based POSCO in September 2025. Considered the largest steel producer in Korea, POSCO is aiming to enter the U.S. market. Negotiations continue between the two companies and Cleveland-Cliffs is targeting a definitive agreement in the first half of 2026.
“Our MOU is nonbinding, and we will only move forward on ratifying our partnership if the collaboration is accretive to Cliffs shareholders,” Lourenco said.
Celso added that the larger asset sales are put on hold due to POSCO’s interest in Cleveland-Cliffs’ business.
“They’re looking across our entire footprint,” Celso said. “So we don't want to jeopardize the POSCO opportunity, which is much bigger. But for whatever reason, if the POSCO opportunity were to not materialize, we could pick up where we left off on the larger asset sales. And we've had some meaningful interest in those as well.”
