Donald Trump escalates US-Canada trade war with additional 25% tariff on steel and aluminium

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US President Donald Trump has said he will impose an additional 25 per cent tariff on steel and aluminium imports from Canada, escalating his battle with one of the US’s biggest trading partners.

“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,” Trump wrote on his Truth Social platform on Tuesday.

He added that the levy would come into effect on Wednesday.

Trump said that if Canada did not drop its “long time” tariffs, he would “substantially increase” levies on cars coming into the US, a move he said would “essentially, permanently shut down” the country’s carmaking industry.

The US president added that “the only thing that makes sense is for Canada to become our cherished Fifty First State. This would make all Tariffs, and everything else, totally disappear.” Canada has strongly rejected such overtures from Trump since he became president in January.

Canada has issued retaliatory tariffs against the US in recent weeks as it responded to Trump imposing levies on traded goods that do not comply with the USMCA trade agreement signed by US, Mexico and Canada.

On Monday, Canada’s Ontario province applied a 25 per cent surcharge to power exports to the US, raising electricity prices for about 1.5mn Americans across the states of New York, Michigan and Minnesota.

Ontario Premier Doug Ford said on Tuesday: “Ontario and Canada will not back down until President Trump’s tariffs are gone for good.”

US stocks hit a low of the trading session following Trump’s tariff announcement, with the broad S&P 500 index down 1 per cent. Equities have fallen sharply in recent weeks — including a heavy pullback on Monday — on concerns the levies will slow US growth.

However, shares in US steel producers rose on Tuesday: US Steel was up 2.9 per cent, Nucor climbed 2.5 per cent and Steel Dynamics rose 1.9 per cent.

A closely tracked measure of the difference in US and London aluminium prices, called the Midwest premium, rose sharply on Tuesday, underscoring how American industrial groups are facing rising costs. Futures tracking the premium, which follows prices of the metal delivered to plants in the US Midwest including taxes, transportation and other costs, for settlement next month rose as much as 6 per cent, according to FactSet data.

The US is set to impose tariffs of 25 per cent on imports of steel and aluminium from all trading partners from Wednesday in a move White House officials have framed as a bid to protect US domestic industry.

Trump imposed tariffs of 25 per cent on steel imports and 10 per cent on aluminium during his last term in office, before negotiating carve-outs for some countries.

Former president Joe Biden, who inherited Trump’s tariffs when he entered the White House, struck deals with the EU, UK and Japan that allowed them to export a certain quota of their metals to the US free of duties.

Trump officials have said those agreements would in effect be nullified, and no exclusions for countries or products would be offered.