By President Donald Trump said Tuesday he will double the tariffs imposed on steel and aluminum imported from Canada, an escalation of the brewing economic feud between the U.S. and its largest trading partner.
Trump posted to his Truth Social platform that the tariffs would go from 25% to 50% starting Wednesday, a move that comes in response to the province of Ontario placing a 25% tariff on electricity coming into the United States.
Trump added that he would be declaring a “national emergency” for the three states Ontario has targeted so that the tariffs could go into effect.
President Donald Trump at Joint Base Andrews, Md., on Friday.Roberto Schmidt / AFP – Getty Images
Trump also called on Canada to drop its duties on American dairy products and threatened to “substantially increase” tariffs on cars imported into the U.S. if Canada did not drop “other egregious, long time tariffs.”
The auto tariffs, Trump warned, without citing evidence, “essentially, permanently shut down the automobile manufacturing business in Canada.”
Trump then doubled down on some of his recent rhetoric about making Canada part of the U.S., though he added it would get to keep its national anthem.
“The only thing that makes sense is for Canada to become our cherished Fifty First State,” Trump wrote. “This would make all Tariffs, and everything else, totally disappear.”
CNBC reported that Trump had not yet signed formal paperwork to officially increase the tariffs to 50%, citing a senior administration official who added it was “in the works” and remained “a threat” rather than an action, until that paperwork was prepared and signed.
Markets nevertheless responded negatively to Trump’s threat. The S&P 500 was down as much as 1.2% early Tuesday afternoon, while the Dow Jones Industrial Average gave up as many as 600 points, declining more than 1.6%. Those declines further deepened the market’s recent pullback, with Tuesday’s drop putting the S&P 500 close to what is known as “correction terrtiory” — when an index falls 10 percent or more off its recent high.
Tuesday afternoon, newly appointed Canadian Prime Minister Mark Carney called Trump’s threats “an attack on Canadian workers, families, and businesses.”
“My government will ensure our response has maximum impact in the U.S. and minimal impact here in Canada, while supporting the workers impacted,” Carney said.
He said Canadian tariffs on U.S. goods would remain in place “until the Americans show us respect and make credible, reliable commitments to free and fair trade.”
Morgan Stanley analysts warned that given that the U.S. is a net importer of steel and aluminum from Canada, the tariffs would lead to higher domestic prices. As an example, although steelmaker Alcoa’s state-side facilities would benefit from higher tariffs, it has an even larger presence north of the border.
“We expect a net negative impact to the company as a whole,” the analysts wrote.
Some investors disagreed, sending shares of the Pennsylvania-based firm more 2% higher Tuesday.
Ontario Premier Doug Ford had on Monday announced a 25% surcharge on electricity tapped by some 1.5 million residents of Michigan, Minnesota and New York in response to Trump’s recent bellicose language toward Canada.
Canada has quickly emerged as a target of Trump’s ire amid his second presidential term, putting America’s closest ally on rockier footing. Earlier this month, Trump instituted, then pulled back, tariffs on a variety of Canadian goods as he goaded its leaders and blamed them for a lack of action on fentanyl trafficking. (Relatively little of the drug is seized at the northern border compared to the U.S. border with Mexico).
In another Truth Social post late Monday, Trump called Canada a longtime “tariff abuser.”
“The United States is not going to be subsidizing Canada any longer,” he warned, adding: “We don’t need your Cars, we don’t need your Lumber, we don’t your Energy, and very soon, you will find that out.”
While Mexico has faced similar tariff threats and rhetoric, that country’s president, Claudia Sheinbaum, has succeeded in assuaging Trump.
The strategy has not worked for Canadian officials, who have more aggressively retaliated with tariffs and public comments.
“I’m not too sure why he continues to attack his closest friends and allies, but we need the American people to speak up,” Ontario’s Ford said Tuesday in an appearance on CNBC. “We need those CEOs to actually get a backbone and stand in front of them and tell them this is going to be a disaster. It’s mass chaos right now.”
The New York Independent System Operator, which manages the state’s grid, has said it there is enough generating capacity to transition away from Canadian sources.
A spokesperson for Michigan’s Public Service Commission told The Associated Press Monday the impact on that state’s residents was likely to be “small.” Minnesota Gov. Tim Walz — Kamala Harris’s 2024 running mate — likewise expected minimal impact for his state.
