Washington (AFP) – The United States and Canada traded angry tariff warnings Tuesday, as trade tensions soared and President Donald Trump doubled down on provocative plans to annex his country’s northern neighbor. Despite a compromise arising after a day of threats and counter-threats, Canada and other US trading partners will still be hit at midnight by a blanket 25 percent levy imposed on all steel and aluminum imports. The move comes with “no exceptions or exemptions,” a White House spokesperson told AFP.
The steel and aluminum levies threaten to affect everything from electronics to vehicles and construction equipment — and have manufacturers scrambling to find cost-effective domestic suppliers. Early Tuesday, Trump threatened to double the rate on imports of both metals from Canada, after its province of Ontario imposed an electricity surcharge on three US states. Canadian Prime Minister-elect Mark Carney, in turn, vowed that his incoming administration would hit back with “maximum impact.”
But Ontario has since halted the surcharge after talks with Washington. Wall Street stocks slumped for a second straight day after major indexes fluctuated over Trump’s tariff threats. Ontario Premier Doug Ford, US Commerce Secretary Howard Lutnick, and US Trade Representative Jamieson Greer are set to meet in Washington Thursday “to discuss a renewed USMCA ahead of the April 2 reciprocal tariff deadline,” according to a US-Canada joint statement. This refers to a North American trade pact that also includes Mexico.
Canada, historically among the closest US allies, had been facing aggressive rhetoric and found itself the target of Trump’s ire on trade — alongside unprecedented questioning of and threats to its sovereignty. Canada supplies half of US aluminum imports and 20 percent of US steel imports, says industry consultant EY-Parthenon.
On Tuesday, Trump said on Truth Social that if Canada uses electricity as a bargaining chip “they will pay a financial price for this so big that it will be read about in History Books for many years to come!” He also threatened to boost tariffs on cars from April 2, saying this would “essentially, permanently shut down the automobile manufacturing business in Canada.” Trump has vowed reciprocal levies as soon as April 2 to remedy trade practices Washington deems unfair, raising the potential for more products and trading partners to be specifically targeted.
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.” Trump, meanwhile, backed up his tariff threats by saying again that Canada should be absorbed. The “only thing that makes sense” is for Canada to join the United States as a 51st state, he said. “This would make all Tariffs, and everything else, totally disappear.”
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.” Trump, however, played down fears over the economy, saying he does not see a recession coming while dismissing losses on Wall Street.
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.
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.
However, 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.
© 2024 AFP
