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President Donald Trump has said he will double US tariffs on steel and aluminium imports from Canada to 50 per cent, increasing the pressure on equities and briefly tipping the S&P 500 into a so-called correction.
The escalation of Trump’s battle with one of the US’s biggest trading partners inflamed investor worries about the impact of his aggressive trade policy on the world’s largest economy.
The S&P dropped as much as 1.5 per cent on Tuesday, a more than 10 per cent fall from its all-time high less than three weeks ago. US aluminium and steel prices soared following Trump’s announcement. The index later recovered ground but was still down about 0.2 per cent.
“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 his Truth Social platform on Tuesday, pledging to impose the tariffs on Wednesday.
Trump said the move was in retaliation to a 25 per cent surcharge that Canada’s Ontario province has placed on power exports to the US, raising electricity prices for about 1.5mn Americans in New York, Michigan and Minnesota.
In a later social media post, Trump added: “Can you imagine Canada stooping so low as to use ELECTRICITY, that so affects the life of innocent people, as a bargaining chip and threat?”
The announcement is the latest in a series of tit-for-tat salvos between the US and Canada as Trump’s aggressive tariff threats and economic nationalism threaten to fracture North American trade.
Shortly after his inauguration, the US president said he would impose 25 per cent tariffs on Canada and Mexico, but last week he granted a one-month reprieve for goods that met the rules of a 2020 free trade deal.
The aluminium and steel tariffs are part of a separate set of duties to be imposed on producers across the world, which is due to take force on Wednesday.
White House officials said the global 25 per cent tariffs on imports of the metals were intended to protect US domestic industry.
Ontario premier Doug Ford, who has brawled publicly with Trump in recent days, responded that US markets were “tanking” because of the US president’s trade policy. “He needs to drop his tariffs and come to the table to negotiate a fair trade deal,” Ford wrote on X. “Until he does, we won’t back down.”
Mark Carney, Canada’s incoming prime minister, described Trump’s latest escalation as “an attack on Canadian workers, families, and businesses”.
Carney added that his government would “ensure our response has maximum impact in the US and minimal impact here in Canada”.
The White House on Tuesday continued to dismiss widespread concerns over the market turmoil.
“When it comes to the stock market, the numbers that we see today, the numbers we saw yesterday . . . are a snapshot of a moment of time,” said press secretary Karoline Leavitt.
“We are in a period of economic transition,” Leavitt added.
Despite the slide in broader stock indices, shares in US steel producers rose on Tuesday. US Steel was up 3.8 per cent, Nucor rose 2.4 per cent and Steel Dynamics gained 1.6 per cent.
A closely tracked measure of the difference in US and London aluminium prices, called the Midwest premium, rose sharply on Tuesday, underscoring the rising costs facing American industrial groups.
Futures tracking the premium, which follows prices of the metal delivered to plants in the US Midwest, rose as much as 18 per cent, according to FactSet data.
Trump said that if Canada did not drop its “long time” tariffs, he would “substantially increase” levies on cars coming into the US, a move he said would “essentially, permanently shut down” the country’s carmaking industry.
Trump, who also suggested the US’s northern neighbour could no longer be assured that Washington would protect it militarily, added that “the only thing that makes sense is for Canada to become our cherished Fifty First State. This would make all Tariffs, and everything else, totally disappear.”
Canada has strongly rejected such suggestions by Trump since he became president in January.
Additional reporting by Steff Chávez in Washington
