U.S.-Canada trade war escalates as Trump raises tariffs to 50%

In a dramatic escalation of trade tensions, former U.S. President Donald Trump has announced a doubling of tariffs on Canadian steel and aluminum, raising them from 25% to 50%.

The move comes in response to Ontario’s 25% surcharge on electricity exports to several U.S. states.

In a statement on Truth Social on Tuesday, March 11, 2025, Trump declared, “Based on Ontario, Canada, placing a 25% Tariff on ‘Electricity’ coming into the United States, 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.”

The tariffs are set to take effect on Wednesday, March 12, and Trump has once again suggested incorporating Canada into the United States, a statement that has enraged Canadian leaders.

The announcement has sent shockwaves through the financial markets, with analysts warning of potential economic fallout.

The Nasdaq had its worst day since September 2022, plunging 4%, while the Dow Jones fell 1.2% and the S&P 500 also declined. Market uncertainty is growing amid fears that escalating tariffs could trigger a recession in both the U.S. and Canada.

Ontario Premier Doug Ford strongly condemned Trump’s decision, stating, “We will be relentless… 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.’”

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Ford has previously threatened to cut off U.S. access to Canadian energy supplies in retaliation for American tariffs, a move that could further escalate tensions between the two neighboring countries.

Trump responded with another social media post, accusing Canada of using electricity “as a bargaining chip and threat.” He warned that Canada “will pay a financial price for this so big that it will be read about in history books for many years to come.”

Trump’s latest trade war salvo extends beyond Canada. The former president has already imposed tariffs on Canada, Mexico, China, steel, and aluminum and is considering additional tariffs on Europe, Brazil, South Korea, pharmaceutical drugs, copper, lumber, and computer chips.

Economists argue that this aggressive trade stance could undermine global trade stability and potentially backfire on U.S. businesses that rely on imports.

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Trump was scheduled to speak on Tuesday afternoon at the Business Roundtable, a powerful trade association of CEOs. While he has previously courted business leaders with promises of lower corporate tax rates, his sweeping tariff increases—dubbed a “massive tax hike” by some economists—are expected to face significant pushback from American manufacturers and industry leaders.

With the U.S. and Canada locked in an escalating trade dispute, experts warn that retaliatory measures from both sides could further strain diplomatic relations and disrupt North American trade.

The coming weeks will be crucial in determining whether negotiations can de-escalate tensions or if both countries will be heading into an extended economic showdown.