The United States and Canada traded angry tariffs threat on Tuesday, as trade tensions soared and President Donald Trump doubled down on provocative plans to annex Canada.
Despite a compromise arising after a day of threats and counter-threats, Canada and other U.S. trading partners will still be hit at midnight by a blanket 25 per cent levy imposed on all steel and aluminium imports.
The move comes with “no exceptions or exemptions,” a White House spokesperson said.
The steel and aluminium tariffs threaten to affect everything from electronics to vehicles and construction equipment — and have manufacturers scrambling to find cost-effective domestic suppliers.
Early Tuesday, Trump threatened to double the rate on imports of both metals from Canada, after its province of Ontario imposed an electricity surcharge on three U.S. states.
Prime minister-designate Mark Carney, in turn, vowed that his incoming administration would hit back with “maximum impact.”
But Ontario has since halted the surcharge after talks with Washington.
Ontario Premier Doug Ford, U.S. Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer are set to meet in Washington Thursday to discuss a renewed CUSMA “ahead of the April 2 reciprocal tariff deadline,” according to a U.S.-Canada joint statement.
This refers to a North American trade pact that also includes Mexico.
Wall Street stocks slumped for a second straight day after major indexes fluctuated over Trump’s tariff threats.
Canada, historically among the closest U.S. allies, had been facing aggressive rhetoric and found itself the target of Trump’s ire on trade — alongside unprecedented questioning of and threats to its sovereignty.
Canada supplies more than half of U.S. aluminium imports and 20 per cent of U.S. steel imports, says industry consultant EY-Parthenon.
Electricity, autos
On Tuesday, Trump said on Truth Social that if Canada uses electricity as a bargaining chip “they will pay a financial price for this so big that it will be read about in History Books for many years to come!”
He also threatened to boost tariffs on cars from April 2, saying this would “essentially, permanently shut down the automobile manufacturing business in Canada.”
Trump has vowed reciprocal levies as soon as April 2 to remedy trade practices Washington deems unfair, raising the potential for more products and trading partners to be specifically targeted.
Reacting to Trump’s announcement on MSNBC, Ontario Premier Doug Ford said the U.S. president made “an unprovoked attack on our country, on families, on jobs.”
Trump, meanwhile, backed up his tariff threats by saying again that Canada should be absorbed.
The “only thing that makes sense” is for Canada to join the United States as a 51st state, he said. “This would make all Tariffs, and everything else, totally disappear.”
Costs and opportunities
Former U.S. Treasury Secretary Larry Summers said on X that Trump’s tariff threats on Canada would be “a self-inflicted wound to the U.S. economy that we cannot afford, at a moment when recession risks are rising.”
Trump, however, played down fears over the economy, saying he does not see a recession coming while dismissing losses on Wall Street.
If some companies were bracing for a damaging period of higher production costs, others sensed an opportunity.
Drew Greenblatt, owner of Baltimore-based metal product manufacturer Marlin Steel, said incoming levies on imported steel have already boosted his new orders.
“We only use American steel, so we’re thrilled with the tariffs,” he said, adding that these helped him gain an edge over a competitor.
For Robert Actis, whose firm makes stucco netting used in construction, the expanded scope of incoming levies is a relief.
Currently, a business like his imports wire for manufacturing, facing added tariff costs. But foreign-made finished products could enter the U.S. market.
With incoming tariffs covering a range of finished metal products too, Actis said this levels the playing field.
But higher import costs will likely ripple through the economy.
A major U.S. maker of steel products warned American steel prices would surge to match the elevated costs of foreign goods.
Supply constraints nudge prices up too, making items like nails, for example, more expensive as much of their cost is in original steel.
Purchasers in industries like homebuilding would therefore end up spending more and could pass costs to consumers, making homes less affordable.
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