Donald Trump doubles tariffs on Canadian steel, aluminium to 50% as trade war intensifies

President Donald Trump has announced plans to double the tariffs on Canadian steel and aluminium imports from 25% to 50%, escalating the ongoing trade tensions between the United States and its northern neighbour, Canada. This move is seen as a retaliatory measure against Ontario's recent imposition of a levy on electricity imports from the US. The tariffs are set to take effect on Wednesday.

“I have instructed my Secretary of Commerce to add an ADDITIONAL 25 per cent Tariff, to 50 per cent, on all STEEL and ALUMINUM COMING INTO THE UNITED STATES FROM CANADA, ONE OF THE HIGHEST TARIFFING NATIONS ANYWHERE IN THE WORLD,” Donald Trump posted Tuesday on Truth Social.

The US stock market promptly fell following the social media post.

After a brutal stock market selloff because of his tariff threats, President Donald Trump faces pressure on Tuesday to show he has a legitimate plan to grow the economy instead of perhaps pushing it into a recession.

Donald Trump is set to deliver an afternoon address to the Business Roundtable, a trade association of CEOs that during the 2024 campaign he wooed with the promise of lower corporate tax rates for domestic manufacturers.

But his plans for tariffs on Canada, Mexico, China, steel, aluminium — with more to possibly come on Europe, Brazil, South Korea, pharmaceutical drugs, copper, lumber and computer chips — would amount to a massive tax hike.

The investment bank Goldman Sachs revised down its growth forecast for this year to 1.7 per cent from 2.2 per cent previously. It modestly increased its recession probability to 20 per cent “because the White House has the option to pull back policy changes if downside risks begin to look more serious”.

Trump has tried to assure the public that his tariffs would cause a bit of a “transition” to the economy, with the taxes prodding more companies to begin the years-long process of relocating factories to the United States to avoid the tariffs. But he set off alarms in an interview broadcast on Sunday in which he didn't rule out a possible recession.

“I hate to predict things like that,” Donald Trump said on Fox News Channel's “Sunday Morning Futures."

”There is a period of transition, because what we're doing is very big. We're bringing wealth back to America. That's a big thing. And there are always periods of — it takes a little time. It takes a little time. But I don't — I think it should be great for us. I mean, I think it should be great."

The promise of great things ahead did not eliminate anxiety, with the S and P 500 stock index tumbling 2.7 per cent on Monday in an unmistakable Trump slump that has erased the market gains that greeted his victory in November 2024. 

The S and P 500 index continued to fall in Tuesday morning trading.

The White House after the markets closed on Monday highlighted that the tariffs were prompting companies such as Honda, Volkswagen and Volvo to consider new investments in US factories.

It issued a statement that Trump's combination of tariffs, deregulations and increased energy production had led industry leaders to promise to “create thousands of new jobs”.

Donald Trump reverses 50% tariff levy on steel

Within hours, by Tuesday afternoon, Trump made a U-turn and called off the imposition of 50% tariffs on steel and aluminum from Canada.

The switch came after a Canadian official also backed off his own plans for a 25% surcharge on electricity, reported Reuters.

(With agency inputs)