Donald Trump has said he will double his planned tariffs on Canadian steel and aluminium from 25% to 50%.
The US president said the increase set to take place on Wednesday is a response to price rises the provincial government of Ontario put on electricity sold to the US.
In a post on his social media platform Truth Social he said: “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.”
On Monday, Ontario announced it would charge 25% more for electricity to 1.5 million American homes and businesses. Canada’s most populous province provides electricity to Minnesota, New York and Michigan.
The US stock market fell following Mr Trump’s post.
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Ontario’s response
Responding to Mr Trump’s post, Ontario’s premier Doug Ford said he would not back down until the US leader’s tariffs on Canadian imports were “gone for good”.
Mr Trump has said he put separate 25% tariffs on Canada because of fentanyl smuggling and high Canadian taxes on dairy imports, which penalise US farmers.
He has called for Canada to become part of the United States as its “cherished 51st state” as a solution, which has angered Canadian leaders.
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Analysis: Uncertainty index spikes amid on/off confusion over Trump tariffs
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Economic impact
The stock market has fallen over the last two weeks and Harvard University economist Larry Summers put the odds of a recession at 50-50.
“All the emphasis on tariffs and all the ambiguity and uncertainty has both chilled demand and caused prices to go up,” the former treasury secretary for the Clinton administration posted on X on Monday.
“We are getting the worst of both worlds – concerns about inflation and an economic downturn and more uncertainty about the future and that slows everything.”
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Investment bank Goldman Sachs revised down its growth forecast for this year from 2.2% to 1.7% and moderately increased its recession probability to 20% “because the White House has the option to pull back policy changes if downside risks begin to look more serious”.
Mr Trump has tried to reassure the American public his tariffs will cause a bit of a “transition” to the economy as taxes spur more companies to begin the years-long process of relocating factories to the US to avoid tariffs.
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Trump refuses to rule out recession
But Mr Trump did not rule out the possibility of a recession during an interview with Fox News on Sunday, where he said:” I hate to predict things like that.
“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.”
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On Monday the S&P 500 stock index fell 2.7% and on Tuesday morning it fell roughly 0.4%.
