(Newsweek) United States President Donald Trump retaliated against Canada over its tariff on American electricity imports and said he would put an additional 25 percent tariff on steel and aluminum, taking it up to 50 percent, as a result.
In a post on his Truth Social platform, Trump said he had instructed his Secretary of Commerce Howard Lutnick to implement the new steel and aluminum tariffs on Canada effective March 12.
Why it Matters
The tariffs are part of an escalating trade war between the U.S. and Canada.
The president started the latest conflict over what his administration perceives as a lack of sufficient action to stop the flow of illicit drugs such as fentanyl across America’s borders, fueling an opioid epidemic that has cost thousands of lives through overdoses.
Trump has also put new tariffs on Mexico and China for the same reason, and his administration says it will introduce reciprocal tariffs—these aimed at creating what it sees as fairness in all its trading relationships—across the world on April 2.
This burgeoning trade war is unsettling markets, which fear that a North American recession is looming as a result.
But Trump sees tariffs as a powerful tool to either protect the domestic economy from unfair global competition, or to force much better trading terms for the U.S. from those who, in his view, are taking advantage at the expense of American firms and consumers.
What to Know
On Monday, Ontario Premier Doug Ford announced the 25 percent surcharge on electricity sales to Michigan, Minnesota, and New York in response to Trump’s new tariffs on Canadian goods.
Ford estimated that his new surcharge would cost “families and businesses in these states up to $400,000 each and every single day.”
According to the Narwhal, a nonprofit Canadian media outlet, Ontario sells about $700 million in electricity to the United States each year, which provides power for 1.5 million homes.
In his Truth Social post, Trump also told Canada to “immediately drop their Anti-American Farmer Tariff of 250% to 390% on various U.S. dairy products, which has long been considered outrageous.”
The president said he would declare a national emergency on electricity in the area affected by Canada’s tariff, describing it as an “abusive threat”.
He said more tariffs would come for Canada unless they dropped their own against America.
“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 wrote. “Those cars can easily be made in the USA!”
Trump Repeats 51st State Line
Trump said the U.S. was “subsidizing” Canada to the tune of $200 billion a year and said the only thing that made sense was for it to become America’s “cherished” fifty-first state.
It’s a suggestion he has made several times in recent months to both the amusement and frustration of Canadians.
“The artificial line of separation drawn many years ago will finally disappear, and we will have the safest and most beautiful Nation anywhere in the World — And your brilliant anthem, ‘O Canada,’ will continue to play, but now representing a GREAT and POWERFUL STATE within the greatest Nation that the World has ever seen!” Trump wrote on Truth Social.
What People Are Saying
Ontario Premier Doug Ford told reporters on Monday: “We will apply maximum pressure to maximize our leverage … Let me be clear: I will not hesitate to increase this charge if necessary. If the United States escalates, I will not hesitate to shut the electricity off completely. Believe me when I say I do not want to do this. I feel terrible for the American people because it’s not the American people who started this trade war. It’s one person who is responsible, that’s President Trump.”
Gerard Lyons, chief economic strategist at Netwealth, said of the recent market turmoil: “When Trump was elected it was clear that his economic policies contained the good, the bad and the uncertain. The markets initially focused on the good—in terms of his tax and regulatory changes for the US economy. Now the focus is on the bad—namely tariffs. The uncertainty around the execution of these adds to the uncertainty. Tariffs can have a triple whammy, adding to worries about inflation, growth and denting confidence.”
What Happens Next
The latest tariffs hike on Canadian steel and aluminum starts March 12. Canada’s Ford has said he would respond again to any escalation, so watch this space. Then, coming April 2, we have the big one—America’s reciprocal tariffs all around the world.
