Berliner Boersenzeitung - Trump doubles down on Canada trade war with major tariff hike

Trump's shock new threats came hours before a midnight deadline for ramping up the Republican's increasingly global trade offensive with levies on both metals.

On his Truth Social platform, Trump said he would double planned 25-percent tariffs on steel and aluminum to 50 percent for imports of the metals from Canada.

A 25-percent levy is still due to kick in Wednesday for US trading partners, hitting Brazil, Mexico, the United Arab Emirates and other countries.

The upcoming tariffs, which currently allow for no exceptions, threaten to affect everything from electronics to vehicles and construction equipment -- and have manufacturers scrambling to find cost-effective domestic suppliers.

The country facing the most aggressive action is Canada, historically one of the United States' closest allies and top trading partners.

Ottawa is locked in an extraordinarily bitter war of words with the Republican, facing constant threats over its sovereignty.

Canada's incoming prime minister Mark Carney struck a defiant note Sunday, saying Canadians are "always ready" for a fight if one is needed.

A Canadian government source told AFP Tuesday that Ottawa will "have to respond" in kind if Trump hiked tariffs further on its goods.

Canada supplies half of US aluminum imports and 20 percent of US steel imports, noted industry consultant EY-Parthenon.

- Electricity emergency? -

Trump said his supercharged tariffs were in response to Canadian province Ontario's 25-percent surcharge on electricity exports to three US states.

Trump said he would announce an electricity national emergency in the area hit by the price increases.

He also ramped up threats, warning that if what he called "egregious" Canadian tariffs are not dropped, he would boost tariffs on cars from April 2.

This would "essentially, permanently shut down the automobile manufacturing business in Canada," he said.

Trump has vowed reciprocal levies as soon as April 2 to remedy trade practices Washington deems unfair.

Reacting to Trump's announcement on MSNBC, Ontario Premier Doug Ford said the US president made "an unprovoked attack on our country, on families, on jobs," promising an appropriate response.

In his social media post Tuesday, Trump said the "only thing that makes sense" is for Canada to join the United States as a 51st state.

"This would make all Tariffs, and everything else, totally disappear," Trump said.

- Costs and opportunities -

Former US Treasury Secretary Larry Summers said on X that Trump's tariff threats on Canada would be "a self-inflicted wound to the US economy that we cannot afford, at a moment when recession risks are rising."

But if some companies were bracing for a damaging period of higher production costs, others sensed an opportunity.

Drew Greenblatt, owner of Baltimore-based metal product manufacturer Marlin Steel, said incoming levies on imported steel have already boosted his new orders.

"We only use American steel, so we're thrilled with the tariffs," he told AFP, adding that these helped him gain an edge over a competitor that was using Chinese metal imports.

For Robert Actis, whose firm makes stucco netting used in construction, the expanded scope of incoming levies is a relief.

Currently, a business like his imports wire for manufacturing, facing added tariff costs. But foreign-made finished products could enter the US market.

With incoming levies covering a range of finished metal products too, Actis said this levels the playing field.

But higher import costs will likely ripple through the economy.

A major US maker of steel products warned American steel prices would surge to match the elevated costs of foreign goods.

Supply constraints nudge prices up too, making items like nails, for example, more expensive as much of their cost is in original steel.

Purchasers in industries like homebuilding would therefore end up spending more and could pass costs to consumers, making homes less affordable.

(K.Müller--BBZ)