Trump Says He’s Doubling Tariffs on Canadian Steel, Aluminum

President Donald Trump said he would increase steel and aluminum tariffs on Canada to 50% to retaliate against Ontario’s move raising taxes on electricity sent to the US, ramping up his fight with the US’s largest trading partner.

“This will go into effect TOMORROW MORNING, March 12th,” Trump said Tuesday in a social media post. A planned 25% metals tariff is set to take effect just after midnight, and Trump’s decision doubles the rate for Canada.

The U.S. president said he would also “substantially increase” tariffs on Canadian automobile parts on April 2 if Ottawa does not drop tariffs on dairy products and other U.S. goods.

The move would “essentially, permanently shut down the automobile manufacturing business in Canada,” Trump said. The president reiterated his belief that Canada should become a part of the U.S., saying it would “make all Tariffs, and everything else, totally disappear.”

Trump’s snap decision marks the latest escalation in his trade dispute with the North American neighbor, and risks further upsetting markets which have posted steady losses since the president moved forward last week with an initial round of tariffs on Canada and Mexico. U.S. stocks resumed their decline after Trump said he would double the tariffs; the S&P 500 Index was down 0.9% at 10:59 a.m. in New York, while the Dow Jones Industrial Average fell by 1.4%. The Canadian dollar slid to a weekly low.

The move also shows the shifting and unpredictable nature of Trump’s tariff plans and the extent to which they rest on the whims of the president. Industry experts supporting the steel and aluminum tariffs were taken off guard Tuesday morning, according to people familiar with the matter, indicating Trump had not widely discussed doubling tariffs on Canada on the eve of their implementation.

“Ontario and Canada will not back down until President Trump’s tariffs are gone for good,” Ontario Premier Doug Ford said Tuesday in a social media post.

The U.S. president’s move also comes as Canada is set to have a new prime minister — providing a stark test for Mark Carney, who is poised to take over from Justin Trudeau as soon as this week.

Trump’s move to increase tariffs on Canada would also cost American businesses. Canada is the main source of aluminum for U.S. industry and the auto plants Trump is threatening to shutdown are owned by U.S. automakers.

Early in his term, Trump imposed 25% duties on Canadian and Mexican goods, only to subsequently delay the move for one month. When the tariffs went into effect last week, the U.S. president within days moved to exempt products covered under USMCA, a North American free trade agreement he negotiated during his first term, after markets dropped and at the urging of U.S. auto manufacturers.

Another planned wave of tariffs could hit as soon as April. Trump plans to impose “reciprocal” duties that he considers equivalent to countries’ tariffs, non-tariff barriers and certain taxes, including Canada’s 5% general sales tax, which is applied to nearly all purchases domestically. Trump has regularly complained about Canada’s dairy tariffs, which are a part of the country’s protected system of production quotas, known as supply management.

Canadian Response

Canada responded to Trump’s tariffs with a series of retaliatory measures, including a 25% surcharge on electricity sent to Minnesota, New York, and Michigan from Ontario. That threatens to further increase price pressure on Americans whose budgets are already strained by persistent inflation.

New York imported about 4.4% of its total electricity from Canada in 2023, according to Bloomberg calculations using data from the state’s grid operator. The percentage for Minnesota and Michigan is even less, according to the Midcontinent Independent System Operator, the region’s grid operator.

Canada’s federal government has also imposed tariffs on items like American orange juice, footwear and motorcycles.

Ford, one of the country’s prominent conservative politicians, enacted the electricity tariffs amid widespread outrage in Canada over Trump repeatedly suggesting that the U.S. should annex Canada.

Trump “has created this chaos not just here, in Canada, the US and Mexico, but around the world right now,” Ford told Bloomberg Television on Monday evening. “He ran on a mandate to lower inflation, create more jobs, and it’s done the total opposite. Inflation’s going up, assembly plants will close if he continues on with these tariffs on the auto sector, people will lose their jobs, manufacturing will go down and people will have less money in their pockets.”

Trump also said he would declare a national emergency on electricity in the region, promising the move will allow the US “to quickly do what has to be done to alleviate this abusive threat from Canada.”

Trump already declared a nationwide energy emergency his first day in office, opening the possibility of using special and little-used subsidies in federal law in new ways to propel the construction of pipelines, power lines and other projects.

In U.S. areas now receiving electricity from Ontario, the Trump administration could potentially use powers to press coal power plants into more service, potentially expedite new generation projects or enable swifter permitting and construction of electrical transmission infrastructure.

Top photo: An employee covers a stack of aluminum billets at a casting center in Saguenay, Quebec.