US President Donald Trump announced on Tuesday that he has directed his administration to increase tariffs on Canadian steel and aluminum imports by an additional 25%, resulting in total duties of 50%. This new policy will take effect on Wednesday morning, as stated in a post on Truth Social. Trump reiterated his suggestion for Canada to become the "Fifty First State" of the U.S.
The decision to impose these additional tariffs was made in response to Ontario's government imposing a 25% tax on electricity exports to the U.S. This action by Ontario Premier Doug Ford was a response to the 25% tariffs previously imposed by Trump on imports from Canada.
“Based on Ontario, Canada, placing a 25% Tariff on “Electricity” coming into the United States, 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,” Trump wrote on Truth Social on Tuesday morning.
“This will go into effect TOMORROW MORNING, March 12th,” he wrote.
Stocks initially dropped following Trump's announcement on Truth Social regarding his latest tariff threat. The Nasdaq Composite saw a slight increase of 0.3%, while the S&P 500 and Dow both experienced decreases of 0.3% and 0.8%, respectively, before recovering some losses.
In response to Ontario's 25% surcharge on electricity to New York, Minnesota, and Michigan, Trump stated that he would impose a 25% tariff on Canadian electricity. This move could further raise costs for Americans, especially those in northern states that depend on energy imports from Canada. Ontario's surcharge, revealed on Monday, is expected to raise monthly bills by $100, according to Ontario Premier Doug Ford.
Trump's decision to impose higher tariffs on Canadian steel and aluminum is aimed at damaging the Canadian economy, but it also poses a significant risk to the American economy, CNN reported. Canada is the primary supplier of iron, steel, and aluminum to the US, with $11.4 billion worth of aluminum and $7.6 billion worth of iron and steel imported from Canada last year, according to data from the US Commerce Department.
Canadian aluminum exports represent 41% of all aluminum imported by the US last year, while Canadian iron and steel accounted for nearly a quarter of imports. The potential 25% tariff on Canadian aluminum alone could result in the loss of 100,000 jobs in the US, as cautioned by the CEO of one of the largest US aluminum producers, Alcoa.
According to the Aluminum Association, the aluminum industry in the United States directly employs 164,000 workers and indirectly supports an additional 272,000 jobs within related industries such as mining, construction, and manufacturing.
While Alcoa's headquarters are in Pittsburgh, CEO William Oplinger noted that a significant portion of the company's aluminum production is located in Canada and subsequently imported to the United States.