A Powerful New Tool To Fight Trump’s Canada Trade War

US President Donald Trump quadrupled tariffs on steel and aluminum from Canada Tuesday, while threatening to “close down” the United States’ neighbour’s auto industry and stating Washington’s ally would be better off if it were swallowed whole by the United States.

Trump’s fresh threats came hours before a midnight deadline to escalate the Republican’s globe-spanning trade offensive with tariffs on both metals.

But on his Truth Social platform, Trump said he would increase to 50 percent from planned 25 percent tariffs on steel and aluminum for imports of the metals from Canada.

The Prime Minister-elect of Canada, Mark Carney, vowed that his incoming administration would respond with “maximum impact.”

A 25 percent tax on steel and aluminum is also set to go into effect Wednesday for US trading partners, affecting Brazil, Mexico, the United Arab Emirates and several other countries.

Just after 12:45pm (1745 GMT) major Wall Street indexes were down at least 1.0 percent.

The new steel and aluminum levies, which have no exemptions at this stage, threaten to hit everything from electronics to cars and construction equipment — and have manufacturers scrambling to find affordable domestic suppliers.

The country on the receiving end of the most forceful action is Canada, historically one of America’s closest allies and best trading partners and now the butt of Trump’s trade rage — and, for the first time ever, doubt about its sovereignty.

Canada accounts for half of U.S. aluminum imports and 20 percent of U.S. steel imports, industry consultant EY-Parthenon noted.

Electricity, autos –

Trump said his supercharged tariffs were a reaction to Canadian province Ontario’s 25 percent charge on electricity exports to three states.

“If Canada, in some form, is able to leverage this electricity or energy as a bargaining chip, then they will pay a financial price for this so big that it will be read about in the History Books for many, many years to come!” Trump wrote on Truth Social.

He also warned that he could raise tariffs on cars on April 2.

This would “effectively, permanently shut down the automobile manufacturing business in Canada,” he added.

Trump has threatened reciprocal duties as early as April 2, targeting trade practices that Washington considers unfair, increasing the likelihood that more products and more trading partners will be specifically targeted.

Challenging Canadian sovereignty –

Responding to Trump’s announcement, Ontario Premier Doug Ford said, “The president of the United States made an unprovoked attack on our country, on families, on jobs,” on MSNBC.

Trump, for his part, followed up his threats of tariffs by reiterating that Canada should be absorbed.

“Only thing that makes sense,” he said, is Canada becoming the 51st state of the United States. “Doing so would make all Tariffs, and everything else, go away.

Costs and opportunities –

Former US Treasury secretary Larry Summers wrote on X that Trump’s threats to impose tariffs on Canada would amount to “a self-inflicted wound to the US economy that we cannot afford, at a moment when the risks of recession are rising”.

But while some companies were preparing for a period of higher production costs to hit their bottom lines, others saw an opening.

Drew Greenblatt, who runs the Baltimore-based metal product maker Marlin Steel, said incoming tariffs on foreign steel have already spurred new orders for his company.

“We use only American steel, so we’re very happy with the tariffs,” he told AFP, noting that these gave him an advantage over a rival.

The expansive reach of incoming levies is a relief for Robert Actis, whose firm produces stucco netting, used in construction.

Now, one of his manufacturing business imports wire with extra tariff incurred. Finished products made elsewhere might still come to the US market.

Actis said this levels the playing field since incoming levies cover a breadth of finished metal products as well.

But the higher import costs will probably ripple through the economy.

A large maker of steel products in the United States warned that prices for American steel would jump to align with the higher costs of foreign goods.

Supply constraints push prices up too, meaning items like nails, for instance, are costlier as much of their cost is in original steel.

Buyers in sectors such as homebuilding would thus pay more and might recoup costs through customers, adding to inaccessibility of houses.