Trump Doubles Tariffs on Canadian Steel and Aluminum to 50%

WASHINGTON (AP) — On Tuesday, President Donald Trump announced that he will double the planned tariffs on steel and aluminum imported from Canada, raising them from 25% to 50%. This move escalates the ongoing trade war with the United States' northern neighbor.

Trump stated on social media that the hike in tariffs, which is set to take effect on Wednesday, is a reaction to electricity price increases imposed by the Ontario provincial government on exports to the United States.

He said, “I have instructed my Secretary of Commerce to add an ADDITIONAL 25% Tariff, making it 50%, on all STEEL and ALUMINUM COMING INTO THE UNITED STATES FROM CANADA, ONE OF THE HIGHEST TARIFFING NATIONS ANYWHERE IN THE WORLD,” in a post on Truth Social.

The President has provided various reasons for his confrontational stance towards Canada. These include issues related to fentanyl smuggling and his discontent with Canada's high dairy import taxes, which he claims disadvantage American farmers. Remarkably, Trump has suggested that the solution might be for Canada to become the 51st state of the U.S., a remark that has angered Canadian officials.

“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.”

The announcement led to an immediate decline in the U.S. stock market, exacerbating concerns following a significant market drop on the previous Monday. This situation has put pressure on Trump to demonstrate a credible plan for stimulating economic growth while not leading the economy into a recession.

On the same day, Trump was scheduled to give a speech to the Business Roundtable, which is a collective of business leaders that he had previously engaged during the 2024 campaign with promises of lower corporate taxes for domestic producers. However, his proposed tariffs on a wide range of imports, including steel, aluminum, and potential future tariffs on products from Europe, South Korea, and others, represent a considerable tax increase.

Recent market trends reflect a lack of confidence, raising the stakes for Trump as he balances a push for higher tariffs against his image as a business-savvy leader. Harvard economist Larry Summers recently placed the likelihood of a recession at 50%, adding that uncertainty around tariffs has dampened demand while driving prices up.

“All the emphasis on tariffs and all the ambiguity and uncertainty has both chilled demand and caused prices to go up,” Summers noted on X. “We are getting the worst of both worlds – concerns about inflation and an economic downturn and more uncertainty about the future which slows everything down.”

Goldman Sachs lowered its growth forecast for the current year to 1.7%, down from 2.2% previously, and increased its odds of a recession to 20%, citing that the White House might retract policy changes if risks of economic downturn increase.

In his defense, Trump claimed that his tariffs would usher in a period of "transition" where U.S. companies would relocate factories domestically to avoid tariffs. Nonetheless, during a recent interview, he did not dismiss the possibility of an economic recession.

“I hate to predict things like that,” Trump remarked on the Fox News Channel. “There is a period of transition, because what we’re doing is very big. We’re bringing wealth back to America. But it takes a little time.”

The promises of future economic benefits have not calmed market fears; the S&P 500 stock index fell 2.7% on Monday, erasing gains that followed his election victory in November 2024. It dropped by around 0.4% in Tuesday's morning trading as well.

After the market closed on Monday, the White House emphasized that tariffs are leading companies like Honda, Volkswagen, and Volvo to consider new investments in U.S. manufacturing facilities. They claimed that the combination of tariffs, deregulation, and increased energy production has resulted in industry leaders pledging to generate thousands of new jobs.

However, the significance of these job creations remains unclear, especially considering that the U.S. economy added 2.2 million jobs the prior year, according to the Bureau of Labor Statistics.

Trump, Tariffs, Canada