Trump Threatens Canada with Tariffs, Warns of Potential Auto Industry Shutdown

Trump signaled plans to increase tariffs on Canadian steel and aluminum.

President Donald Trump escalated trade tensions with Canada on Tuesday, vowing to impose new tariffs in response to Ontario’s recent export surcharge on U.S. electricity.

The announcement sent stocks into decline, with the Dow falling 0.2% following Trump’s statement on Truth Social. By 10:30 a.m. ET, the blue-chip index had dropped by 1.1%.

Trump declared that Ontario’s decision to implement a 25% surcharge on electricity exports to New York, Minnesota, and Michigan would be met with equivalent retaliation. He pledged to introduce a 25% tariff on Canadian electricity, a move that could drive up energy costs in northern U.S. states dependent on Canadian power. Ontario Premier Doug Ford had previously warned that the surcharge could raise household electricity bills by $100 per month.

Beyond electricity, Trump also signaled plans to increase tariffs on Canadian steel and aluminum.

“Based on Ontario, Canada, placing a 25% Tariff on ‘Electricity’ coming into the United States, I have instructed my Secretary of Commerce to ad 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 stated in a social media post Tuesday.

Additionally, Trump announced intentions to declare a national electricity emergency in the affected U.S. states. He also issued a warning regarding the auto industry, stating that tariffs on Canadian vehicles would increase significantly starting April 2.

The president claimed these tariffs “will, essentially, permanently shut down the automobile manufacturing business in Canada. Those cars can easily be made in the USA!”

This declaration came just ahead of a midnight deadline for Trump’s proposed 25% tariffs on all steel and aluminum imports.

U.S. Economy Also at Risk

While the intent behind Trump’s proposed tariffs is to exert economic pressure on Canada, the strategy carries risks for the U.S. economy as well.

Canada is the primary supplier of iron, steel, and aluminum to the United States. According to U.S. Commerce Department data, American imports from Canada last year included $11.4 billion worth of aluminum and $7.6 billion worth of iron and steel. Combined, Canadian iron and steel accounted for nearly a quarter of all U.S. imports, while aluminum from Canada made up 41% of total aluminum imports.

Industry leaders have voiced concerns over the economic consequences. The CEO of Alcoa, one of the largest aluminum producers in the U.S., recently cautioned that a 25% tariff on Canadian aluminum alone could lead to the loss of 100,000 American jobs.

The aluminum sector directly employs 164,000 workers in the U.S., with an additional 272,000 jobs linked to related industries such as mining, construction, and manufacturing, according to the Aluminum Association.

Despite Alcoa’s headquarters being in Pittsburgh, a substantial portion of its aluminum production takes place in Canada before being transported to the U.S., CEO William Oplinger noted during an industry conference last month.

As trade tensions continue to rise, both American and Canadian industries brace for the economic impact of Trump’s tariff threats.