On Tuesday, President Donald Trump launched a huge ramping up of trade tensions by doubling duties on all aluminum and steel imported from Canada to 50%. This follows as Ontario recently set a 25% tariff for exporting electricity to the United States.
In a post on his Truth Social site, Trump said he had instructed his commerce secretary to put in place an extra 25% tariff on these metal goods, effective Wednesday morning.
"Also, Canada should immediately lift its Anti-American Farmer Tariff, which is between 250% and 390% on several US dairy products. This has been outrageous for a long time. I will be issuing a National Emergency on Electricity in the region shortly," Trump said.
He also threatened to raise tariffs on Canadian cars starting April 2 if "other egregious, long-standing tariffs are not likewise eliminated by Canada."
In response to Trump's new threat, Ontario Premier Doug Ford resorted to X, indicating that his government would not yield unless all US tariffs against Canadian imports were abolished permanently. Ford's government recently put up increased electricity prices in sections of New York, Michigan, and Minnesota.
Trump's belligerent tariff policy has created shockwaves in the financial markets. The S&P 500 benchmark index fell close to 1%, as investors feared that the new import taxes would silence US economic growth and increase inflation. Meanwhile, the Canadian S&P/TSX Composite index lost 0.5%, and the Canadian currency dipped against the US dollar.
Beginning Wednesday, the wider 25% tariffs on steel and aluminum imports will go into effect, affecting millions of tons of products from Canada, Mexico, Brazil, South Korea, and other nations that had enjoyed exemptions. Trump has promised that no exceptions or carve-outs will be made, contending that the tariffs are necessary to restore struggling US industries.
Since taking office in January, Trump's tough line on tariffs has spooked investors, companies, and consumers. Economists are warning that his trade policies will drive the economy into recession. A survey of small businesses released Tuesday indicated falling sentiment for the third straight month, wiping out optimism that had followed Trump's re-election win on November 5.
A recent Reuters poll of economists across the US, Canada, and Mexico found that uncertainty surrounding US tariffs is creating economic risks for all three nations. Out of 74 experts surveyed, 70 agreed that recession risks have intensified, with the US particularly vulnerable to rising inflation due to trade disruptions.
