WASHINGTON 鈥� Ontario has agreed to suspend a surcharge on electricity exports to the United States after President Donald Trump escalated his trade war Tuesday by vowing to double threatened tariffs on Canadian steel and aluminum imports.
Trump said 50 per cent tariffs would be placed on Canadian steel and aluminum on Wednesday in response to Ontario's decision to place a 25 per cent surcharge on electricity exports, hitting about 1.5 million homes in three U.S. states.
"They will pay a financial price for this so big that it will be read about in History Books for many years to come!" Trump posted on social media.
The president also called on Canada to immediately drop duties on dairy and other "long time tariffs" and threatened to "essentially, permanently shut down the automobile manufacturing business in Canada" with tariffs in April.
Trump said "the only thing that makes sense is for Canada to become our cherished Fifty First State."
Prime minister-designate Mark Carney said he will keep Canada's retaliatory tariffs in place until "Americans show us respect" and commit to free trade again.
"President Trump鈥檚 latest tariffs are an attack on Canadian workers, families and businesses," Carney said in a post on social media.
Carney is expected to be sworn in as prime minister before the end of the week. The White House said Carney had not yet spoken with the president.
Ontario Premier Doug Ford paused the surcharge Tuesday.
Trump has directed a range of complaints and tariff threats at Canada since his election win last November. Canadian officials have said Trump's ultimate goal is to weaken the Canadian economy in order to annex the country.
The president said Tuesday that annexation would end the tariffs and what he called the "Northern Border" problem, adding "the artificial line of separation drawn many years ago will finally disappear."
When asked whether the Trump administration still sees Canada as an ally, White House Press Secretary Karoline Leavitt said "Canada is a neighbour, they are a partner, they have always been an ally, perhaps they are becoming a competitor now."
Markets have been in turmoil since Trump launched 鈥� and partly paused 鈥� a trade war with Canada and Mexico last week.
Trump signed an executive order last Thursday delaying until April tariffs on goods that meet the rules-of-origin requirements under the Canada-United States-Mexico Agreement on trade, also called CUSMA.
The White House has said the steel and aluminum tariffs will stack on top of any other duties that Trump introduces in April, meaning those tariffs could increase to 75 per cent.
About a quarter of all steel used in the United States is imported and Canada is the largest supplier, accounting for nearly 25 per cent of all U.S. steel imports in 2023. Canada is also the United States' largest source of aluminum.
The president's initial tariffs were linked to the flow of deadly fentanyl across the border 鈥� but U.S. government data shows the volume of drugs crossing the northern border is minuscule compared with the amounts crossing the border with Mexico.
Trump also has complained about Canadian defence spending and trade, and has often misrepresented Canada's dairy market policy.
Canada uses "tariff rate quotas" which place a limit on the quantity of a product that can be imported at a lower tariff rate. Under CUSMA, most importers don't pay those high tariffs on Canadian dairy. Around 99 per cent of products traded between the two nations were tariff-free.
Trump's actions don't make sense but they're not "really that different" from before, said Republican strategist Doug Heye.
"We know that Trump doesn't really do nuance," Heye said. "His messaging is blunt force trauma."
During the first Trump administration, when CUSMA was being negotiated to replace the North American Free Trade Agreement, the president used his national security powers to impose a 25 per cent tariff on steel imports and a 10 per cent tariff on aluminum imports in March 2018.
Canada and other countries introduced their own duties on the U.S. in response.
Nearly a year later, the White House announced a deal had been reached with Canada and Mexico, ending the trade dispute.
Economists have said Trump's initial tariffs on steel and aluminum were costly. A report by the Washington-based Tax Foundation said companies were forced to pay higher prices, U.S. exports dropped and the duties resulted in the loss of about 75,000 manufacturing jobs.
The Peterson Institute for International Economics found that each job saved in steel-producing industries came at a high cost to consumers 鈥� roughly $650,000 per job.
Leavitt said the current stock market disruption is a "snapshot of a moment in time" as the U.S. enters a period of economic transition.
"If people are looking for certainty, they should look at the record of this president," she said.
This report by The Canadian Press was first published March 11, 2025.
Kelly Geraldine Malone, The Canadian Press
