U.S. President Donald Trump announced Tuesday that he will impose a 50% tariff on Canadian steel and aluminum.
Trump argued that this decision was made after the province of Ontario, Canada, will charge U.S. entities that import electricity a tax surcharge of approximately 25 percent.
This new Canadian charge will cost U.S. importers about $400,000 per day, according to Ontario Premier Doug Ford.
Canadian steel and aluminum
“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 social media platform Truth Social. “This will go into effect TOMORROW MORNING, March 12th.”
Ford added that Ontario is prepared to increase the surcharge or even suspend its electricity exports to the U.S. altogether.
U.S. tariffs
Trump proclaimed new across-the-board tariffs of 25% on Mexico and Canada and 10% on China effective March 4.
Canada has an exception on energy products, for which a 10% tariff will be paid.
On March 6, Trump signed executive orders. He temporarily exempted some products from Mexico and Canada. The exemption applies until April 2. Only USMCA compliant products are exempt from the tariff.
For Canada, 38% of its exports to the United States are exempt. In the case of Mexico, half of its sales will avoid the new 25 percent tariff.
In this regard, Marcelo Ebrard, Secretary of Economy, said last week that the 25 percent tariff imposed by Trump will push Mexican goods exported to the U.S. market under the USMCA from around 50 to 90 percent.
Economic impacts
China, Mexico and Canada lead the exports that will potentially be subject to the 25 percent tariffs on steel, aluminum and derivatives of both metals to the United States.
According to 2024 data, China will suffer the greatest impact. Its affected exports total 38.514 billion dollars. Mexico faces a potential impact of 34,830 million dollars. Canada, 34,144 million.
The risk of further countermeasures between the United States and Canada is latent: Ford promised that delays and exemptions will not be enough for it to lift the surcharge on electricity.