In a significant escalation of trade tensions, President Donald Trump has signed a plan to impose 25 percent tariffs on all steel and aluminum entering the United States, effective March 12. This decision reverses past exemptions that were given to Canada and other countries. This move has rattled the markets. Home to many multinational corporations, stock exchanges in both Canada and the U.S. are convulsing with every new twist and turn on tariffs.
As the crisis continues to play out, classical places to invest such as gold are rising in value. This increase has taken place against a backdrop of increasing uncertainty in global trade relations. Canadian premiers have confirmed that the country is preparing retaliatory measures in response to Trump’s tariffs, signaling a potential trade war between the two neighboring countries.
Trump’s new sector-specific tariffs came in the form of automobile import tariffs. These tariffs are scheduled to go into effect on April 3, together with the steel and aluminum tariffs. He signaled that these tariffs could be raised to 25 percent, making Asian trade conditions even trickier. He promised a one-month temporary exemption for cars exported through the newly formed North America trade agreement, Canada-U.S.-Mexico Agreement (CUSMA). This move is meant to relax immediate flare-ups while continuing to implement more sweeping tariff impositions.
In the wake of Trump’s moves, Prime Minister Justin Trudeau didn’t waste any time, countering with the announcement of sweeping retaliatory tariffs on U.S. products. These tariffs would affect a staggering array of products ranging from food and alcohol to furniture and paper. This decision echoes Canada’s approach with the intent of protecting its domestic market from the impact of disruptive U.S. tariffs.
Yesterday, the White House clarified that. Automobiles imported under CUSMA will only be taxed on the value of content not produced in the United States. This requirement aims to reduce certain economic burdens imposed by tariffs. It’s most important for what it reveals about the administration’s strong commitment to protecting the little American manufacturing that is left.
Ontario Premier Doug Ford is moving right now. In recent weeks, he has announced a 25 percent surcharge on electricity exports to the United States. This is a flagrant over-reach by DOC and this measure directly responds to tariffs. Our Canadian counterparts are doing this in concert with an aggressive, multi-faceted strategy to mitigate the economic impacts of Trump’s trade war.
Beginning with Trump’s election on November 5, the last few months have been anything but ordinary. Canadian industries and leaders are on an uncertainty-induced trade relations roller-coaster ride. The threat has increased in urgency, not only because Trump is making repeated rumblings toward imposing tariffs on imported cars. This has fostered a climate of fear in both nations.
Trump’s recent announcement about tariffs on imported cars was made when he proclaimed that these tariffs could be imposed “about a month from now on or about April 2.” The very next week, he went out of his way to indicate that those tariffs would be “in the vicinity of 25 percent.” This pronouncement increased alarm over the potential impact on the automotive manufacturing industry.
Public talks at the White House should start about 4 p.m. (EDT). These discussions are expected to address the mutual tariffs that Trump has threatened to implement, as leaders from each country aim to primary, complex trade relationship. This escalating trade war leads to even more concern about economic stability and long term cooperation between the United States and our closest neighbor and ally, Canada.
