Trump Threatens 50% Tariffs on Canada, Ontario Backs Down \ Newslooks \ Washington DC \ Mary Sidiqi \ Evening Edition \ President Donald Trump threatened to double tariffs on Canadian steel and aluminum to 50%, prompting Ontario’s government to suspend planned electricity surcharges on the U.S. As a result, the White House scaled back its tariff hike but kept a 25% import tax in place. The trade dispute shook markets, raised recession fears, and intensified tensions between the U.S. and incoming Canadian Prime Minister Mark Carney, who vowed retaliatory tariffs.
Quick Looks
- Tariff Increase Threat – Trump threatened to double tariffs on Canadian steel and aluminum to 50% before pulling back.
- Ontario Backs Down – In response, Ontario suspended its planned electricity surcharges on U.S. exports.
- Market Turmoil – Stocks slumped amid concerns over escalating trade wars and recession risks.
- Canada’s Response – Incoming Prime Minister Mark Carney vowed to keep retaliatory tariffs in place until the U.S. commits to free trade.
- Trump’s Political Move – The president continues to use tariffs as a negotiating tool, despite their impact on the economy.
- Broader Trade Fights – Trump has also targeted Mexico, China, and Europe, with more tariffs on pharmaceuticals, copper, lumber, and tech goods looming.
Deep Look
The U.S.-Canada trade conflict intensified Tuesday as President Donald Trump threatened to double tariffs on Canadian steel and aluminum to 50%, citing Ontario’s electricity surcharge on U.S. exports. The move rattled financial markets, stoked fears of a global trade war, and prompted a swift policy reversal by Ontario, which suspended the surcharge in response.
Following Ontario’s decision, the White House scaled back its tariff hike, though the administration will still impose a 25% tax on Canadian steel and aluminum imports starting Wednesday.
Ontario’s Retreat and Trump’s Victory
The trade standoff began when Ontario introduced a 25% surcharge on electricity sold to U.S. buyers—an apparent response to Trump’s existing tariffs on Canadian imports. Trump retaliated by threatening to increase tariffs on steel and aluminum from 25% to 50%.
“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,” Trump posted on Truth Social.
Hours later, Ontario Premier Doug Ford received a call from U.S. Commerce Secretary Howard Lutnick and agreed to remove the surcharge, effectively defusing the tariff escalation.
“He has to bounce it off the president, but I’m pretty confident he will pull back,” Ford said, noting that Ontario isn’t backing down completely but is looking for a “constructive conversation” with the U.S.
Stock Market Reaction: Trump’s Trade War Fuels Investor Jitters
Trump’s tariff threats triggered another turbulent day on Wall Street, with investors increasingly concerned about the economic fallout of escalating trade disputes.
- On Monday, the S&P 500 fell 2.7%, erasing gains from Trump’s 2024 election victory.
- On Tuesday, markets initially fell another 0.2%, before rebounding slightly after Ontario’s decision to lift the electricity surcharge.
Despite growing recession fears, Trump defended his aggressive tariff strategy, arguing that higher import taxes would ultimately strengthen the U.S. economy.
“Tariffs are necessary to fix our economy,” Trump stated, dismissing concerns over stock market declines.
Canada’s Response: Retaliation and Rising Tensions
The dispute has worsened U.S.-Canada relations, with incoming Canadian Prime Minister Mark Carney pledging retaliatory tariffs on U.S. goods.
Carney, who is set to replace Justin Trudeau in the coming days, condemned Trump’s trade policies as an attack on Canadian workers and businesses.
“My government will keep our tariffs on until the Americans show us respect and make credible, reliable commitments to free and fair trade,” Carney declared.
Carney’s government is expected to announce new Canadian tariffs on Wednesday, adding to the existing $30 billion CAD ($21 billion USD) in retaliatory tariffs on U.S. goods, including:
- Orange juice, peanut butter, and coffee
- Home appliances and cosmetics
- Motorcycles and paper products
Trump’s 51st State Remark Angers Canada
Trump has given various justifications for his aggressive trade stance against Canada, including complaints about fentanyl smuggling and high dairy tariffs. However, his suggestion that Canada should become part of the U.S. has sparked outrage among Canadian leaders.
“The only thing that makes sense is for Canada to become our cherished Fifty First State,” Trump posted on Truth Social. “This would make all tariffs, and everything else, totally disappear.”
Mexico Also Faces Trade Pressure
Trump has similarly targeted Mexico, imposing 25% tariffs on imports due to his concerns over drug trafficking and illegal immigration. However, the tariffs have been suspended for one month for goods compliant with the 2020 USMCA trade deal.
When asked whether Mexico fears similar 50% tariffs, Mexican President Claudia Sheinbaum responded cautiously:
“No, we are respectful.”
Trump’s Business Tensions: Balancing Tariffs and Corporate Support
Trump is walking a fine line between supporting domestic manufacturers and frustrating American business leaders with his tariff-heavy trade policies.
On Tuesday, he was scheduled to address the Business Roundtable, a powerful group of CEOs, many of whom backed his 2024 campaign due to promises of lower corporate taxes.
However, his tariffs on Canada, Mexico, China, and Europe—as well as potential taxes on pharmaceuticals, copper, lumber, and semiconductors—are raising concerns about higher costs for American companies and consumers.
Growing Recession Fears Amid Trade Uncertainty
The trade war escalation has fueled economic anxiety, with Goldman Sachs lowering its U.S. growth forecast for 2025 from 2.2% to 1.7%.
The investment bank also raised its recession probability to 20%, warning that the White House may be forced to reverse policy if risks intensify.
Despite these warnings, Trump has remained steadfast, insisting that his tariffs will encourage companies to move manufacturing back to the U.S. However, he raised alarm bells in a Sunday interview, where he did not rule out the possibility of a recession.
Stock Market Slide: Trump’s Economic Gamble
Trump’s economic policies have put him at odds with Wall Street, despite his history of using the stock market as a political barometer.
- After his 2024 election win, Trump claimed credit for post-election stock gains.
- Now, with the S&P 500 erasing those gains, investors worry that tariffs could push the U.S. into recession.
At an August rally in Pennsylvania, Trump made a dire warning:
“If I don’t win, you will have a 1929-style depression. Enjoy it.”
As trade wars escalate and economic uncertainty grows, that prediction may soon be put to the test.
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