More than 600 Iron Range steelworkers out of work as auto industry cuts orders because of tariffs

More than 600 Iron Range steelworkers will be out of a job as mines that supply the struggling auto industry go offline.

Cleveland-Cliffs will temporarily idle two Minnesota operations: Hibbing Taconite Co. in Hibbing and the Minorca Mine in Virginia. The Ohio-based company, North America’s largest producer of flat-rolled steel, has notified the state of the upcoming layoffs, according to a statement Thursday.

“These temporary idles are necessary to rebalance working capital needs and consume excess pellet inventory produced in 2024,” the statement said. “We remain committed to supporting our employees and communities while monitoring market conditions.”

While Cleveland-Cliffs executives say they expect President Donald Trump’s tariff plans to shift the industry in their favor, tariffs are shaking up the U.S. auto industry and could have downstream effects on American-made steel.

After a 60-day period under the federal Worker Adjustment and Retraining Notification (WARN) Act, 630 employees will be laid off, according to the company. The two plants produce steel pellets used in automobile manufacturing.

As Trump’s nascent trade war takes hold, Minnesota taconite producers may benefit from a 25% tariff on steel. Still, analysts aren’t anticipating the import tax will boost domestic production enough to replace imported steel. U.S. steel production capacity rose just 7% after tariffs were implemented during Trump’s first term, according to a March 12 report from RBC Capital Markets.

Meanwhile, new tariffs on imported goods from Canada, Mexico and China are throwing a wrench in the American auto industry, which is largely unprepared to shift production to home soil. Earlier this month, Trump granted U.S. automakers a one-month exemption on tariffs on imports from Mexico and Canada.

“It’s my position that strategic, smart tariffs on critical industries that protect our domestic supply of things like steel are really critical,” said state Sen. Grant Hauschild, DFL-Hermantown. “My fear is that, while I do support tariffs on targeted areas, perhaps what we are doing is having reverberations that go far beyond what we were thinking.”

Mining is the backbone of the Mesabi Iron Range, employing thousands of people and shoring up the regional economy. It’s also a political wedge, pushing the historically Democratic stronghold to the right as division grows between those who rely on the jobs the mines provide and those concerned about the industry’s environmental impact.

Longtime Virginia Mayor Larry Cuffe Jr. said the move is “disappointing and devastating” to the affected families on the Iron Range. He said a representative from Cleveland-Cliffs assured him it was temporary but couldn’t give a timeline for idling beyond “when the steel prices get better.”

Workers will receive unemployment and subsidized pay through their union, Cuffe said, but as the boom and bust of mining goes, so goes the region.

As a major economic driver, when mining thrives, communities thrive, he said. When production halts, that also means less production taxes paid and less money going to schools, cities and townships that benefit from it. Mining companies pay taxes on production in lieu of property taxes.

Cleveland-Cliffs idled its Northshore Mining operations in Babbitt and Silver Bay in 2022 and 2023. The state extended unemployment insurance for workers, who were sidelined for nearly a year.

Though Iron Range lawmakers said Thursday they’re hopeful this round of layoffs will be shorter-lived, they also said they’re prepared to offer that benefit again.

“In the event of a longer-term layoff, Rangers need to know that we in the Iron Range Delegation are already working on a bill for extended unemployment to keep our skilled workforce on the Range,” Rep. Cal Warwas, R-Clinton Township, said in a statement. “I will continue to do everything in my power to mitigate the pain of this situation and work toward any solution that gets people back to work.”

Cleveland-Cliffs reported an $81 million adjusted loss in the fourth quarter. Its stock price opened at $9.42 a share Thursday, down from about $22 a year ago.

Demand for steel last year was the lowest since 2010 — with the exception of the pandemic recession in early 2020 — with slowdowns in the auto industry, construction and industrial production, Cleveland-Cliffs CEO Lourenco Goncalves said during a Feb. 25 earnings call.

Goncalves pointed to “unnatural market factors,” including elevated interest rates and competition from foreign producers, and applauded the recent steel tariffs.

“Cleveland-Cliffs is not depending on imported inputs and we do not rely on foreign supply chains that can be disrupted overnight,” he said. “The tariffs will penalize the foreign competitors who have been playing by a different set of rules while strengthening the domestic producers who actually invest in American workers, American manufacturing and American supply chains.”

The company launched a “Buy American” incentive program March 7, offering a $1,000 cash bonus to any employee who buys or leases “a new American-built vehicle with substantial Cliffs’ steel content,” according to a news release.

Brooks Johnson of the Minnesota Star Tribune contributed to this story.