Trump doubles tariffs on Canadian steel and aluminium, as trade war escalates
by Kit Heren · LBCBy Kit Heren
Donald Trump has doubled planned tariffs on imports of Canadian steel and aluminium from 25% to 50%.
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The US president made the announcement on Tuesday afternoon in response to the Canadian state of Ontario raising electricity prices sold south of the border.
The increases are set to take effect on Wednesday.
In a sign of an escalating trade war, Mr Trump said on his social media site Truth Social: "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."
The US stock market promptly fell following the post.
Mr Trump has announced tariffs on Canada, Mexico and China, as well as on all imports of steel and aluminium, in a bid to boost US manufacturing - but the trade barriers have sent shockwaves through the stock market.
Stock market falls as Trump's tariffs spark retaliation
The president has also since delayed the imposition of some of the tariffs.
Mr Trump has given a variety of explanations for his approach to Canada, saying his tariffs are about fentanyl smuggling and voicing objections to Canada putting high taxes on dairy imports that penalise US farmers.
But he continues 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," he posted on Tuesday. "This would make all Tariffs, and everything else, totally disappear."
But his tariffs on Canada, Mexico, China, steel, aluminium - 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 increase.
Just last week, the S&P 500 registered its worst week since September, sliding downwards by 3.1%.
After imposing and then quickly pausing 25% tariffs on imports from Mexico and Canada, markets were sent into a downward spiral over concerns of a trade war.
The stock market's vote of no confidence over the past two weeks gives the president a dilemma 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.
Harvard University economist Larry Summers, a former treasury secretary for the Clinton administration, on Monday put the odds of a recession at 50-50.
"All the emphasis on tariffs and all the ambiguity and uncertainty has both chilled demand and caused prices to go up," he posted on X. "We are getting the worst of both worlds - concerns about inflation and an economic downturn and more uncertainty about the future and that slows everything."
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Investment bank Goldman Sachs revised down its growth forecast for this year to 1.7% from 2.2% previously. It modestly increased its recession probability to 20% "because the White House has the option to pull back policy changes if downside risks begin to look more serious".
Last week, the Atlanta Federal Reserve warned of an economic contraction in the first quarter of the year, further fuelling the stock market decline.
Speaking on Monday, Mr Trump refused to rule out the possibility of a recession or higher inflation this year, amid the volatility in the US stock market caused by his tariffs.
The US president said his country is going through a "period of transition" and that his economic policy will "take a little time".
When the US hit China with 20% tariffs, the Asian economic giant said they were ‘ready for war’ with the US.
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In a direct threat to Trump, China’s representatives in America said: “If war is what the US wants, be it a tariff war, a trade war or any other type of war, we’re ready to fight till the end.”
Less than a month after returning to the White House on January 20, Trump slapped 10% duties on all Chinese imports.
China responded with 15% duties on coal and liquefied natural gas products, and a 10% tariff on crude oil, agricultural machinery and large-engine cars imported from the US.
Despite the uncertainty caused by the tariff policy, the US president said his plans for broader ‘reciprocal’ tariffs will go into effect on April 2, raising them to match what other countries assess - meaning the trade war could be continuing for a while longer.
In his interview on Sunday, Trump seemed to acknowledge that his plans could affect US growth, but would ultimately be "great for us".