In a sharp escalation of trade tensions, US President Donald Trump has announced the potential imposition of 50% tariffs on all steel and aluminium imports from Canada. This move comes as a retaliation against Ontario's decision to levy a 25% tariff on electricity exported to northern US states. Trump asserts that these measures aim to make tariffs "disappear," bolster Canadian security, and reduce domestic taxes.
The trade spat has already impacted the stock market, which has seen significant declines, marking one of its worst performances in 2025. The S&P index fell by approximately 1%, while the Nasdaq dropped 0.8%, with Tesla experiencing a severe hit of 15.4%. This market downturn reflects investor fears over the broader implications of Trump's aggressive tariff policies.
Goods from key trading partners such as China, Mexico, and Canada constituted over 40% of US imports in 2024. However, Trump has repeatedly accused these countries of insufficient efforts to curb the influx of migrants and illegal drugs, including fentanyl, into the United States. Fentanyl, a potent opioid, is linked to tens of thousands of overdose deaths annually in the US.
Outgoing Canadian Prime Minister Justin Trudeau addressed these accusations, asserting that Canada contributes less than 1% to the fentanyl entering the US, with the majority originating from Mexico. Meanwhile, incoming Prime Minister Mark Carney firmly responded to Trump's recurring suggestions that Canada should join the US as its 51st state. Carney declared, "Canada will never be part of America."
Trump has frequently voiced his desire for Canada to become part of the United States, claiming it would enhance the nation’s strength and greatness.
"Based on Ontario, Canada, placing a 25% Tariff on 'Electricity' coming into the United States, I have instructed my Secretary of Commerce to add an ADDITIONAL 25% Tariff," stated President Trump.
The tariffs imposed by the US have already affected economic relations with Canada and Mexico, contributing to a downward trajectory in the stock market that began last week. This economic strain underscores the broader impact of trade tensions on financial markets and investor confidence.
Tim Tierney, a prominent figure in US-Canada relations, described the tariff actions as "a punishment to residents on both sides of the border" and emphasized the strength of longstanding bilateral ties.
"two very good friends for a very long time," remarked Tim Tierney.
Despite these historical ties, Tierney stressed Canada's sovereignty and resilience in the face of external pressures.
"We will never be the 51st state (in the US). We are our own nation. We're very proud Canadians," Tierney asserted.
Tierney further highlighted Canada's stance against intimidation tactics.
"We respect our American friends, but we won't be bullied," he added.
As the situation unfolds, businesses and policymakers in both countries are closely monitoring developments. The ramifications of heightened tariffs extend beyond immediate economic impacts, potentially influencing diplomatic relations and regional trade dynamics.