Trump tariffs on steel and aluminum come into effect amid US-Canada trade war

Trump has also threatened more tariffs on 2 April on the car industry that would “essentially, permanently shut down the automobile manufacturing business in Canada”.

Asking rhetorically why the US received electricity from another country, he accused Canada of using energy, “that so affects the life of innocent people, as a bargaining chip and threat” and said “they will pay a financial price for this so big that it will be read about in History Books for many years to come”.

Mark Carney, Canada’s incoming prime minister, called Trump’s latest move “an attack on Canadian workers, families and businesses” and promised to “keep our tariffs on until the Americans show us respect and make credible, reliable commitments to free and fair trade”.

The Trump administration was also reportedly preparing on Tuesday to institute a new rule that would require some Canadians staying in the US for more than 30 days to register personal information and agree to fingerprinting, according to Bloomberg. Currently there is largely frictionless travel for citizens between the two countries.

The fractious economic battle between the US and Canada has developed even graver undertones as Trump makes increasingly aggressive threats for the US to absorb its northern neighbour. Although at first claiming that he wanted Canada to crack down on fentanyl, Trump has now accused the US ally of underpaying for military protection and incorrectly described the trade imbalance with Canada as a $200bn subsidy from the US.

Trump coupled his tariff declaration with openly aggressive language about making Canada “our cherished Fifty First State”, repeating a constant refrain over the last few months. He claimed American statehood for Canada would make “all tariffs, and everything else, totally disappear”, called the border “an artificial line of separation drawn many years ago” and suggested the Canadian national anthem, O Canada, would become a state anthem.

The rhetoric has inspired a rare unity among Canadian politicians, with Carney campaigning for Liberal leader on standing up to Trump, and saying to a standing ovation in his acceptance speech on Sunday that “Canada never, ever will be part of America”.

Trump’s moves are just the latest in the chaos around the president’s trade policy, amid tumbling stock markets and fears it could trigger a possible US recession.

The White House’s strategy so far has been to play down the anxiety on Wall Street, even as stocks waver. After Trump refused to rule out the possibility of a recession in an interview with Fox News over the weekend, the Nasdaq had its worst day on Monday since September 2022, dropping 4%.

Shares in US automakers also fell after the announcement, as traders bet that high metal tariffs would drive up costs for the American industrial sector, eating into their profits. Ford Motor dropped nearly 4%, while General Motors dipped by 1.3%. Shares in the carmaker Stellantis – which has several manufacturing facilities in Canada – fell by more than 5%.

Price premiums for aluminum on US physical market soared to a record high above $990 a metric ton, Reuters reported.

The Ontario premier Ford has said that Trump must take the blame if there is a recession in the US, telling MSNBC on Tuesday: “If we go into a recession, it will be called the Trump recession.”

Ford has said in the past that he would be willing to cut off US energy supply from Canada completely in response to Trump’s tariffs.

“We will be relentless,” Ford said, adding he would not “hesitate” to shut off electricity exports to the US if Trump continues the trade war.

“That’s the last thing I want to do. I want to send more electricity down to the US, to our closest allies or our best neighbors in the world. I want to send more electricity.” But, he said, “Is it a tool in our toolkit? One hundred per cent, and as he continues to hurt Canadian families, Ontario families, I won’t hesitate to do that.”

Ford also encouraged American CEOs, who have been largely silent on the trade war and threats to Canadian sovereignty, to speak up. On Tuesday Trump is set to meet with the Business Roundtable, an influential group of business leaders that includes the CEOs of Google, Amazon and JPMorgan.

Ford said: “We need those CEOs to actually get a backbone and stand in front of him and tell him, ‘This is going to be a disaster. It’s mass chaos right now.’”

The group said in a statement last week that while it supported trade policies that “open markets to US exports, revitalize the domestic manufacturing base and de-risk supply chains”, it called on the White House to “preserve the benefits” of the US-Mexico-Canada Agreement (USMCA), which Trump himself signed in 2020 but has since apparently violated by suddenly imposing steep tariffs on both countries.

Both consumer and business confidence has dropped in the US since Trump entered office.

A survey published on Monday in Chief Executive magazine found that CEOs’ rating of the current business climate fell 20% in January, from 6.3 out of 10 – with 1 being “poor” and 10 being “excellent” – to 5, the lowest since spring 2020.
Meanwhile, consumer confidence measured by the Conference Board found that confidence dropped over 6% in February, its biggest month-to-month drop since August 2021.

Trump had not yet spoken with Carney, said the White House press secretary Karoline Leavitt on Tuesday, arguing that the tariffs on Canadian metals “was a retaliatory statement due to the escalation of rhetoric that we’ve seen out of Ontario, Canada”.

“I think Canada is a neighbor. They are a partner. They have always been an ally,” she said, adding: “Perhaps they are becoming a competitor now.”

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Stephen Collopy

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