Washington (AFP) – US President Donald Trump doubled tariffs on Canadian steel and aluminum Tuesday, while threatening to “shut down” the country’s auto industry and saying the best way to end the trade war is for Washington’s ally to be absorbed into the United States. Trump’s new threats came hours before a midnight deadline for ramping up the Republican’s globe-spanning 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. Canadian Prime Minister-elect Mark Carney vowed that his incoming administration would hit back with “maximum impact.” A 25 percent levy on steel and aluminum is also due to kick in Wednesday for US trading partners, hitting Brazil, Mexico, the United Arab Emirates, and other countries.
Around 1:45pm (1745 GMT), major Wall Street indexes were down by at least 1.0 percent. The upcoming steel and aluminum levies, which currently contain 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 closest US allies and top trading partners, but now the target of Trump’s ire on trade — and unprecedented questioning of its sovereignty. Canada supplies half of US aluminum imports and 20 percent of US steel imports, noted industry consultant EY-Parthenon.
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 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 the History Books for many years to come!” He also threatened he could also 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, raising the potential for more products and more 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.” 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.
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.
© 2024 AFP
