President Donald Trump on Tuesday announced that tariffs on all imports of steel and aluminum products from Canada would be doubled to 50%.
This comes in response to Ontario’s decision to impose a 25% tax on imported US electricity, which has increased trade tensions between the two neighbouring countries.
Both parties continue to engage in a tit-for-tat trade war, despite potential consequences for economic stability and future cooperation.
Tariffs take center stage
President Donald Trump announced on his Truth Social platform that he has directed his commerce secretary to impose an additional 25% tariff on steel and aluminum products from Canada, effective Wednesday morning.
Trump also called on Canada to eliminate what he described as an “Anti-American Farmer Tariff” of 250% to 390% on various US dairy products, labeling it “outrageous.”
He stated his intention to declare a National Emergency on electricity in the affected area.
Additionally, Trump warned of a potential substantial increase in tariffs on cars imported into the US starting April 2 if Canada does not reduce what he termed “other egregious, long-time tariffs.”
Ontario Premier Doug Ford stated in response that he would not back down until Trump removed all tariffs.
Both leaders’ unwillingness to compromise on trade policy, which might impact millions of workers and businesses, might deepen the concerns in the international markets.
Economic ramifications
According to a Reuters report, the announcement of increased tariffs shocked financial markets, resulting in a nearly 1% decline in the benchmark S&P 500 index.
Investors were concerned that these import levies would hinder US economic development and unleash fresh inflationary pressures.
The Canadian dollar also fell versus the US dollar, reflecting the uncertainty created by Trump’s proposals.
Similarly, the S&P/TSX Composite Index on the Toronto Stock Exchange declined by almost 0.5%.
As the trade war drags on, experts have expressed growing fears about a recession in North America triggered by the feud.
70 out of 74 economists surveyed by Reuters across Canada, the US, and Mexico indicated that the likelihood of a recession has increased following the introduction of US tariffs.
The move has also heightened concerns about inflationary pressures in the US, adding complexity to an already challenging economic landscape for policymakers.
US-Canada trade relations
As President Trump and Premier Ford maintain their views, the future of US-Canada trade ties remains uncertain.
The impact of these tariffs goes beyond economic figures; they affect millions of workers in critical industries ranging from agriculture to manufacturing.
While Trump looks adamant in his intention to raise tariffs, economists warn of potential consequences that might spread throughout both economies.
As tensions between the United States and Canada rise, clarity and cooperation will be critical in reducing the risks of a worsening trade war.
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