US President Donald Trump has announced a significant increase in tariffs on Canadian steel and aluminum. These tariffs will now reach a total of 50%. This decision is part of an escalating trade war, triggered by Ontario’s recent electricity surcharge affecting northern US states.
Trump has warned that if tariffs on goods, including agricultural products, are not lifted, he will raise taxes on the car industry. He claims this could severely cripple automobile manufacturing in Canada.
Ontario’s Premier, Doug Ford, vowed that his province would not back down while the threat of tariffs looms. He called the trade war initiated by Trump “unprovoked” and suggested that if the US escalates further, he might cut off electricity exports entirely.
Tariffs are essentially taxes added to imported goods. Companies that bring these products into the US pay the tariffs, but often pass the costs on to consumers. Trump mentioned that his new tariffs would take effect on Wednesday, and he plans to declare a “national emergency on electricity” affecting specific states.
Trump also remarked that Canada benefits from US military protection, reiterating his controversial stance that Canada should become the 51st state. He believes this would eliminate tariffs altogether.
In responses to the tariffs, Canadian Prime Minister-designate Mark Carney criticized the measures as attacks on Canadian families and businesses. He promised that Canada would maintain its tariffs until the US shows a commitment to fair trade.
The backdrop of these announcements is a volatile market environment. On Tuesday, the S&P 500 index fell another 0.5%, adding to the previous day’s 2.7% drop, marking the largest single-day decline since last December. The UK and European markets reacted similarly, closing down as uncertainty loomed over trade and economic impacts.
Before Trump’s announcement, US businesses were already feeling the pressure from rising tariffs. For instance, Jason Goldstein of Icarus Brewing in New Jersey noted that consistent warnings from suppliers about increasing costs for essentials like grain and aluminum cans have left businesses uneasy. Goldstein has started stockpiling supplies to buffer against potential price hikes.
“It’s definitely a worrying time for us,” he said, emphasizing the unprecedented need to stay glued to news to understand daily industry dynamics.
