Trump Escalates Canada Tariffs Amid Threats on U.S. Electricity Exports

What Happened?

President Donald Trump escalated his tariff threats on Canada, which could potentially lead to the disruption of its auto industry.

Tariffs on Canadian steel and aluminum imports would rise by 25%, bringing the total duties to 50%.

On Truth Social, Trump stated the move will take effect Wednesday.

Trump also stated he would 'substantially increase' tariffs on Canadian automobile parts on April 2 if Ottawa's longtime measures impacting U.S. farmers are not addressed.

Essentially, this would permanently shut down the automobile manufacturing business in Canada, according to the president.

The decision, Trump said, was in response to the latest move by Ontario’s government to impose a 25% tax on electricity exports to the U.S.

Northern states like New York, Minnesota, and Michigan would have significantly been impacted as a result.

The measure swiftly ended in a joint statement Tuesday from Ontario's premier and U.S. commerce secretary.

Trump criticized Canada for 'stooping so low' to use electricity as a threat and bargaining chip that affects many lives.

Top American trade officials have reportedly agreed to negotiate with the Canadian province in Washington DC sometime this week.

Why it Matters

Trump warned that America would match tariffs dollar-for-dollar on U.S. dairy exports as both sides engage in a brewing trade war.

U.S. stocks recently tumbled at the opening bell Monday amid the Trump administration's ongoing tariff disruption.

The president wouldn't rule out the possibility of a recession during his Fox News interview that aired Sunday.

Some economists have raised the expectations of a recession within the next 12 months to 20%, as others stand higher at 35%, citing Washington policy changes.

China has implemented retaliatory measures on U.S. farm exports amid 20% tariffs imposed by Trump on Chinese imports.

Outgoing Canadian Prime Minister Justin Trudeau anticipates the trade war to be ongoing 'for the foreseeable future.'

How it Affects You

Trump has provided a one-month exemption on various Mexican tariffs in compliance with the United States-Mexico-Canada Trade Agreement (USMCA).

That exemption will end when Trump has pledged to implement reciprocal tariffs on all major U.S. trading partners.

Should the U.S. carry out the 25% measure on Canadian imports, it could push Canada into a 2025 recession.

Business leaders are monitoring trade market developments as Trump has vowed to reduce the historic U.S. trade deficit of $131.4 billion.

American consumers could experience a sharp rise in price inflation, even if a trade war is temporary.