In a significant economic maneuver, US President Donald Trump announced on Tuesday his intention to increase tariffs on Canadian steel and aluminium from 25% to a staggering 50%. This decision follows a tumultuous market selloff on Monday, which heightened concerns over a potential recession in the United States.
Trump shared his plans on his social media platform, Truth Social, stating that the new tariffs would come into effect on Wednesday. He attributed this move to the recent price hikes in electricity imposed by the provincial government of Ontario, which he claims affects the cost of goods imported into the US.
“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,” he wrote.
Economic pressures and trade war implications
As the stock market fluctuates and public discontent grows, Trump is under mounting pressure to articulate a clear strategy for economic growth. His administration’s approach to tariffs has raised alarm among economists and business leaders, who fear that such aggressive trade policies could exacerbate economic downturns.
In a recent statement, Trump reiterated his stance on Canadian tariffs, linking them to broader issues such as fentanyl smuggling and high dairy import taxes that he argues disadvantage American farmers. Furthermore, he provocatively suggested that Canada should consider becoming the “51st state” of the US, claiming this would eliminate all tariffs and simplify trade relations.
In response, Ontario Premier Doug Ford criticized Trump’s tactics, claiming that the chaos resulting from the trade war is detrimental to both Canadian and American economies. On MSNBC, Ford commented, “If we go into a recession it’s self-made by one person. It’s called President Trump’s recession.” He emphasized the need for both nations to thrive without the hindrance of trade conflicts.
Market reactions and future prospects
Trump’s tariffs on Canadian steel and aluminium are not isolated; similar tariffs of 25% have been imposed on Mexico due to ongoing frustrations over drug trafficking and illegal immigration. However, Trump has temporarily suspended these tariffs on compliant imports under the 2020 USMCA trade agreement.
Market analysts are closely monitoring these developments, as the investment bank Goldman Sachs has reduced its growth forecast for the US economy to 1.7%, citing a rising probability of recession at 20%. Investors remain wary, especially after the S&P 500 index witnessed a sharp decline of 2.7% on Monday, reflecting the uncertainty surrounding Trump’s economic policies.
Trump has assured the public that his tariffs will ultimately benefit the economy by encouraging companies to relocate manufacturing back to the United States. However, he acknowledged the potential for economic transitions during this process. In an interview with Fox News, he stated, “There is a period of transition, because what we’re doing is very big. We’re bringing wealth back to America.” Despite his optimistic outlook, the fear of impending recession looms large as volatility continues to grip the markets.