In a move that has sparked fresh concerns about the global economy, US President Donald Trump announced on Tuesday his intention to double tariffs on Canadian steel and aluminum imports, raising them from 25% to 50%. The decision, set to take effect on Wednesday, comes amid escalating trade tensions between the two nations and growing fears of a potential recession.
Trump took to his social media platform, Truth Social, to explain the rationale behind the decision, citing Ontario’s recent price hikes on electricity sold to the United States as the primary trigger. “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,” he wrote, calling Canada “one of the highest tariffing nations anywhere in the world.”
A Provocative Proposal: Canada as the “51st State”
In a surprising twist, Trump also reiterated his controversial suggestion that Canada should become the “51st state” of the United States. He argued that such a move would eliminate tariffs and other trade disputes entirely. “This would make all tariffs, and everything else, totally disappear,” he said.
This statement, while likely intended as a rhetorical flourish, has drawn sharp criticism from Canadian officials and trade experts. Ontario Premier Doug Ford, who recently raised electricity prices in response to Trump’s earlier tariffs, called the US President’s actions chaotic and damaging to both economies.
“If we go into a recession, it’s self-made by one person. It’s called President Trump’s recession,” Ford said during an interview on MSNBC. “We should be booming, both countries. Instead, we’re facing unnecessary turmoil.”
Economic Fallout and Recession Risks
The announcement comes at a precarious time for the US economy. Following a brutal stock market selloff on Monday and continued volatility on Tuesday, Trump faces mounting pressure to demonstrate a coherent economic strategy. Critics argue that the escalating tariffs could further destabilize markets and push the economy toward a recession.
Investment bank Goldman Sachs has already revised its growth forecast for the year, lowering it from 2.2% to 1.7%. The bank also increased its probability of a recession to 20%, citing the potential for further policy changes if economic risks intensify.
Trump, however, has sought to reassure the public, framing the tariffs as part of a broader strategy to bring manufacturing jobs back to the United States. “We’re bringing wealth back to America,” he said in a recent Fox News interview. “There is a period of transition, but I think it should be great for us.”
Despite these assurances, market anxiety remains high. The S&P 500 index tumbled 2.7% on Monday, erasing gains made since Trump’s 2024 election victory, and fell another 1% during Tuesday’s trading session.
Broader Implications for North American Trade
The tariff hike is not limited to Canada. Mexico has also been targeted with 25% tariffs due to Trump’s dissatisfaction over drug trafficking and illegal immigration. However, the administration has temporarily suspended these tariffs for imports compliant with the 2020 USMCA trade pact.
When asked if Mexico feared similar tariff increases, President Claudia Sheinbaum responded diplomatically, saying, “No, we are respectful.”