WASHINGTON – US President Donald Trump said he was increasing the steel and aluminum tariff on Canadian goods to 50 per cent to retaliate against Ontario’s move to place a levy on electricity sent to the US.
“This will go into effect TOMORROW MORNING, March 12th,” Mr Trump said in a social media post. The move doubles a planned 25 per cent metals tariff set to take effect just after midnight.
Mr Trump said he would also “substantially increase” tariffs on Canadian car parts on April 2 if the country does not drop tariffs on dairy products and other US goods.
The move would “essentially, permanently shut down the automobile manufacturing business in Canada”, Mr Trump said.
The move is the latest escalation in Mr Trump’s trade dispute with Canada, and risks further upsetting markets which have posted steady losses since the President moved forward last week with an initial round of tariffs on Canada and Mexico.
US stocks resumed their decline after Mr Trump said he would double the tariffs; the S&P 500 Index was down 0.3 per cent at 10.17am in New York, while the Dow Jones Industrial Average fell by 1 per cent.
The threat is an escalation of Mr Trump’s tariff fight with Canada and the latest shift in his plans. Early in his term, he imposed 25 per cent tariffs on all goods from the US’ northern neighbour, only to subsequently delay the move for one month.
When the tariffs went into effect last week, the US President within days moved to exempt goods covered under USMCA, a North American free trade agreement he negotiated during his first term, after markets dropped and at the urging of US car manufacturers.
The move precedes the next planned wave of tariffs, due in April, in which Mr Trump plans to set a “reciprocal” rate that he considers equivalent to countries’ tariffs, non-tariff barriers and certain taxes, including Canada’s 5 per cent general sales tax, which is applied to nearly all purchases domestically.
Mr Trump has regularly complained about Canada’s dairy tariffs, which are a part of the country’s protected system of production quotas, known as supply management.
Canada responded to the initial tariffs with a series of retaliatory measures, including a 25 per cent surcharge on electricity sent to Minnesota, New York and Michigan from Ontario. Canada’s federal government has also imposed tariffs on items such as US orange juice, footwear and motorcycles.
Ontario Premier Doug Ford, one of the country’s prominent conservative politicians, enacted the electricity tariffs amid widespread outrage in Canada over Mr Trump repeatedly suggesting that the US should annex Canada.
President Trump “has created this chaos not just here, in Canada, the US and Mexico, but around the world right now,” Mr Ford told Bloomberg Television on March 10.
“He ran on a mandate to lower inflation, create more jobs, and it’s done the total opposite. Inflation’s going up, assembly plants will close if he continues on with these tariffs on the auto sector, people will lose their jobs, manufacturing will go down and people will have less money in their pockets.”
Mr Trump also said he would declare a national emergency on electricity in the region, promising that the move will allow the US “to quickly do what has to be done to alleviate this abusive threat from Canada”.
He already declared a nationwide energy emergency on his first day in office, opening the possibility of using special and little-used subsidies in federal law in new ways to propel the construction of pipelines, power lines and other projects.
In US areas now receiving electricity from Ontario, the Trump administration could potentially use powers to press coal power plants into more service, potentially expedite new generation projects or enable swifter permitting and construction of electrical transmission infrastructure. BLOOMBERG
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