U.S. President Donald Trump has escalated trade tensions with Canada by hiking tariffs on steel and aluminum to 50% on Wednesday. This represents a 25% increase over the existing 25% tariff.
This decision comes in response to Ontario’s imposition of a 25% tax on electricity supplied to New York and other U.S. states. Trump has repeatedly called Canada the “51st state,” implying a close association between the two nations.
The New York stock market, already reeling from Trump’s previous actions, took another hit following this announcement.
In a post on his social media platform, Truth Social, Trump stated that he had directed his administration to impose additional tariffs in response to Ontario’s retaliatory measures. The Canadian province had decided to levy a 25% tax on electricity exports to the U.S., countering the initial 25% tariff on Canadian goods.
Trump explained that in response to Ontario’s 25% tax on electricity sent to the U.S., he instructed the Secretary of Commerce to impose an additional 25% tariff on all steel and aluminum imports from Canada, bringing the total tariff to 50%. He noted that Canada ranks among the countries with the highest tariffs globally and added that this measure will take effect on March 12.
Canada is the leading exporter of steel and aluminum to the United States. Last year, Canada’s net exports to the U.S. reached 6.6 million tons of steel and 3.5 million tons of aluminum. This volume significantly outpaces South Korea, the fourth-largest steel exporter at 2.8 million tons, and easily surpasses Brazil, the second-largest at 4.5 million tons.
The stock market reacted negatively to the tariff hike. With two hours left in the trading day, the Dow Jones Industrial Average had fallen 606 points (1.5%) to 41,305.
The S&P 500, widely considered the best indicator of overall market health, dropped 59 points (1%) to 555, while the Nasdaq declined 105 points (0.6%) to 17,362.
Despite the broader market decline, the tech sector saw mixed results, with Tesla and Nvidia shares rising 3.6% and 2.4%, respectively, while Meta Platforms gained over 1%. This rebound among some of the major tech stocks, which had experienced significant losses from the previous trading session.
