Left: A Canadian flag flies in front of the Peace Tower on Parliament Hill in Ottawa, Ontario, Canada, March 22, 2017. Right: President Donald Trump looks on, in the Oval Office of the White House in Washington, D.C., March 7, 2025.
President Donald Trump announced Tuesday his plan to double tariffs on Canadian steel and aluminum despite negative market reactions to the trade war.
“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. This will go into effect TOMORROW MORNING, March 12th,” Trump posted on Truth Social.
Markets reacted negatively to Trump’s latest tariffs, with the Dow Jones dropping by nearly 600 points as Wall Street continues to worry about the possibility of a recession. The S&P 500 and Nasdaq both lowered slightly Tuesday after plunging Monday amid Trump’s trade war.
Trump suggested that his decision came after Ontario slapped a 25 percent tax increase on electricity exports to Michigan, New York, and Minnesota, three U.S. states that border Canada. Ontario added the electricity surcharge in response to the Trump administration’s 25 percent tariffs imposed last week on Canadian and Mexican imports.
Trump also said Tuesday that he would increase auto tariffs on Canada next month if America’s neighbor to the north does not drop its own tariffs on U.S. goods. Trump specifically highlighted Canadian tariffs on U.S. dairy products ranging from 250 percent to 390 percent.
“If other egregious, long time Tariffs are not likewise dropped by Canada, I will substantially increase, on April 2nd, the Tariffs on Cars coming into the U.S. which will, essentially, permanently shut down the automobile manufacturing business in Canada,” Trump added.
The Trump administration created carve outs to the tariffs last week after the president’s trade war spooked investors and caused drops in the market indexes. The White House delayed tariffs on Mexican and Canadian good covered by the U.S.-Mexico-Canada agreement, a trade deal Trump negotiated during his first term. The USMCA covers approximately 50 percent of Mexican imports and 36 percent of Canadian imports. Concerns about American auto supply chains was the reason the White House gave for allowing the tariff loopholes until next month.
Trump routinely defends his tariffs by arguing they are necessary for American border security and to mitigate illegal fentanyl trafficking. At other times he defends tariffs as an economic good in and of themselves, due to the government revenue he claims will result. Many economists have warned that Trump’s universal tariffs could lead to price increases, exacerbating the inflation he inherited from former President Joe Biden.
Mexico and Canada both promised to enact measures to greatly increase border security last month in exchange for Trump pushing back his long-expected tariffs to March. The U.S. neighbor states have repeatedly said they will enact retaliatory tariffs against U.S. exports as long as Trump continues his trade war.
Besides Mexico and Canada, Trump has imposed 20 percent tariffs on Chinese goods to ensure Beijing cooperates with U.S. efforts to stop fentanyl from flowing across the border. Chinese officials have reacted angrily to Trump’s tariffs and made clear they will place retaliatory tariffs on American products as long as the trade war keeps going. Trump instituted tariffs on select Chinese good during his first term and Biden largely kept them in place, while adding new tariffs of his own to promote green manufacturing.
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