President Donald Trump says that he will double his planned tariffs on steel and aluminum from 25% to 50% for Canada, escalating a trade war with the United States’ northern neighbor.
Trump says the increase of the tariffs set to take effect on Wednesday is a response to the price increases that the provincial government of Ontario put on electricity sold to the United States.
Minnesota Governor Tim Walz told Vineeta Sawkar on the WCCO Morning News that the trade war with Canada is unnecessary and calls Canada our most dependable ally.
"We're fighting a trade war with our most dependable ally, a trade war that we signed, President Trump signed the agreement, and he's fighting over this and he's telling us because it's about fentanyl," says Walz Tuesday morning. "More people smuggled eggs than fentanyl from Canada in the last six months. It's ridiculous. It makes no sense."
Minnesota is one of three states along with Michigan and New York that gets some electricity from Canada, but University of Minnesota energy law professor James Coleman says that won't have a major effect on prices in Minnesota and is more likely to hurt New Yorkers who get more of theirs from Ontario. But if the trade war continues to grow, Coleman says things could change.
"Ontario exports some electricity to Minnesota and so there might be some, you know, quite marginal impact, but it's just not a lot," says Coleman. "We import a lot more electricity from Manitoba, for instance, and so, you know, it would be a bigger deal if Manitoba were to impose a similar tariff."
Walz says there is no sign President Trump will stop the back-and-forth and Canada's leaders continue to say they're willing to fight it as well.
"The trade war has, and it will continue to escalate if Donald Trump does not back off, if he does not recognize that Canada and Mexico are our truest friends, they're our next door neighbors," said Walz.
Coleman says we're likely still in the "early days" of the back-and-forth with Canada.
“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 posted Tuesday on Truth Social.
The U.S. stock market promptly fell following the social media post.
Trump was set to deliver a Tuesday afternoon address to the Business Roundtable, a trade association of CEOs that during the 2024 campaign he wooed with the promise of lower corporate tax rates for domestic manufacturers. But his tariffs on Canada, Mexico, China, steel, aluminum — with plans for more to possibly come on Europe, Brazil, South Korea, pharmaceutical drugs, copper, lumber and computer chips — would amount to a massive tax hike.
The stock market’s vote of no confidence over the past two weeks puts the president in a bind between his enthusiasm for taxing imports and his brand as a politician who understands business based on his own experiences in real estate, media and marketing.
Harvard University economist Larry Summers, a former treasury secretary for the Clinton administration, on Monday put the odds of a recession at 50-50.
“All the emphasis on tariffs and all the ambiguity and uncertainty has both chilled demand and caused prices to go up,” Summers posted on X. “We are getting the worst of both worlds - concerns about inflation and an economic downturn and more uncertainty about the future and that slows everything.”
The investment bank Goldman Sachs revised down its growth forecast for this year to 1.7% from 2.2% previously. It modestly increased its recession probability to 20% “because the White House has the option to pull back policy changes if downside risks begin to look more serious.”
Trump has tried to assure the public that his tariffs would cause a bit of a “transition” to the economy, with the taxes prodding more companies to begin the years-long process of relocating factories to the United States to avoid the tariffs. But he set off alarms in an interview broadcast on Sunday in which he didn’t rule out a possible recession.
“I hate to predict things like that,” Trump said on Fox News Channel’s “Sunday Morning Futures.” ”There is a period of transition, because what we’re doing is very big. We’re bringing wealth back to America. That’s a big thing. And there are always periods of — it takes a little time. It takes a little time. But I don’t — I think it should be great for us. I mean, I think it should be great.”
The promise of great things ahead did not eliminate anxiety, with the S&P 500 stock index tumbling 2.7% on Monday in an unmistakable Trump slump that has erased the market gains that greeted his victory in November 2024. The S&P 500 index fell roughly 0.4% in Tuesday morning trading.
The White House after the markets closed on Monday highlighted that the tariffs were prompting companies such as Honda, Volkswagen and Volvo to consider new investments in U.S. factories.
It issued a statement that Trump’s combination of tariffs, deregulations and increased energy production had led industry leaders to promise to “create thousands of new jobs.”
The significance of thousands of additional jobs was unclear, as the U.S. economy added 2.2 million jobs last year alone, according to the Bureau of Labor Statistics.
The Associated Press contributed to this story.