US President Donald Trump said on Tuesday that he would double his planned tariffs on steel and aluminum from 25% to 50% for Canada, a retaliation that prompted the provincial government of Ontario to back down on its planned surcharges on electricity sold to the US.
Tuesday’s escalation and retreat in the ongoing trade war between the United States and Canada only compounded the rising sense of uncertainty in terms of how Trump’s tariff hikes will play out. His spate of tax increases on imports and plans for more have roiled the stock market and stirred up recession risks.
Trump said on social media that the increase of the tariffs set to take effect on Wednesday is a response to the 25% price hike that Ontario put on electricity sold to the United States.
“I have instructed my Secretary of Commerce to add an ADDITIONAL 25% Tariff, to 50%, on all STEEL and ALUMINUM COMING INTO THE UNITED STATES FROM CANADA, ONE OF THE HIGHEST TARIFFING NATIONS ANYWHERE IN THE WORLD,” Trump posted on Truth Social.
Ontario Premier Doug Ford said on Tuesday afternoon that US Commerce Secretary Howard Lutnick called him and Ford agreed to remove the surcharge. He said he was confident that the US president would also stand down on his own plans for 50% tariffs on Canadian steel and aluminum.
“He has to bounce it off the president but I’m pretty confident he will pull back,” Ford said on Trump’s steel and aluminum tariff threat. “By no means are we just going to roll over. What we are going to do is have a constructive conversation.” After a brutal stock market selloff on Monday and further jitters Tuesday, Trump faces increased pressure to show he has a solid plan to grow the economy. So far the president is doubling down on the tariffs he talked up repeatedly during the 2024 campaign and can point to Tuesday’s drama as evidence that taxes on imports are a valuable negotiating tool, even if they can generate turmoil in the stock market.
The US president has given a variety of explanations for his antagonism of Canada, saying that his separate 25% tariffs are about fentanyl smuggling and voicing objections to Canada putting high taxes on dairy imports that penalise US farmers. He also continued to call for Canada to become part of the United States as a solution, which has infuriated Canadian leaders.
“The only thing that makes sense is for Canada to become our cherished Fifty First State,” Trump posted Tuesday. “This would make all Tariffs, and everything else, totally disappear.” Incoming Canadian Prime Minister Mark Carney said his government will keep tariffs in place until Americans show respect and commit to free trade after Trump threatened historic financial devastation for his country.
Carney, who will be sworn in as Justin Trudeau’s replacement in the coming days, said Trump’s latest tariffs are an attack on Canadian workers, families, and businesses.
“My government will keep our tariffs on until the Americans show us respect and make credible, reliable commitments to free and fair trade,” Carney said in a statement.
Canadian officials are planning retaliatory tariffs in response to Trump’s specific steel and aluminum tariffs. Those are expected to be announced Wednesday.
Carney was referring to an initial $30 billion Canadian (US$21 billion) worth of retaliatory tariffs that have been applied on items like American orange juice, peanut butter, coffee, appliances, footwear, cosmetics, motorcycles, and certain pulp and paper products.
Ontario Premier Doug Ford, after responding to Trump by raising electricity prices, said on MSNBC on Tuesday that the people and business leaders in the US need to speak up against the “chaos” caused by Trump’s launching of a trade war.
“If we go into a recession, it’s self-made by one person. It’s called President Trump’s recession,” Ford said. “It shouldn’t be this way. We should be booming, both countries.” Trump condemned the use of electricity “as a bargaining chip and threat,” saying in a separate social media post that Canada “will pay a financial price for this so big that it will be read about in History Books for many years to come!” Ontario provides electricity to Minnesota, New York, and Michigan, and Trump pledged to declare a national emergency in those states.
Trump also has targeted Mexico with 25% tariffs because of his dissatisfaction over drug trafficking and illegal immigration, though he suspended the taxes on imports that are compliant with the 2020 USMCA trade pact for one month.
Asked if Mexico feared it could face the same 50% tariffs on steel and aluminum as Canada, President Claudia Sheinbaum said, “No, we are respectful.” Trump was set to deliver a Tuesday afternoon address to the Business Roundtable, a trade association of CEOs that during the 2024 campaign he wooed with the promise of lower corporate tax rates for domestic manufacturers. But his tariffs on Canada, Mexico, China, steel, aluminum – with plans for more to possibly come on Europe, Brazil, South Korea, pharmaceutical drugs, copper, lumber, and computer chips – would amount to a massive tax hike.”
The stock market’s vote of no confidence over the past two weeks puts the president in a bind between his enthusiasm for taxing imports and his brand as a politician who understands business based on his own experiences in real estate, media, and marketing.
