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Trump said that he is placing an additional 25% tariff on steel and aluminum coming from Canada.
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The stock market extended its sell-off, with automakers and industrial companies getting hit the hardest.
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Trump also said he’ll increase tariffs on cars coming into the US if Canada doesn’t remove its tariffs.
President Donald Trump is ramping up his trade war on Canada after markets have tumbled in part because of the latest round of tariffs.
On Tuesday, Trump wrote on Truth Social that he instructed his commerce secretary to place an additional 25% tariff on steel and aluminum coming from Canada into the US, bringing the tariff rate on those imports to 50%.
Trump said those tariffs will go into effect on March 12. He also wrote in the post that he would declare a national emergency on electricity to push back on Canada’s prior threats to shut off power in some US regions if Trump continues to enforce tariffs.
“This will allow the U.S to quickly do what has to be done to alleviate this abusive threat from Canada,” Trump wrote.
Investors sold stocks on the news, with the major market averages all posting losses that accelerated following Trump’s Truth Social post. The Dow Jones Industrial Average shed 633 points at its intraday low.
The stocks most negatively impacted by the elevated tariffs were those of automakers and industrial companies, which count steel and aluminum as major inputs.
General Motors and Ford each declined as much as 4%, while the industrials sector declined about 2%, double the S&P 500’s decline of 1%.
Stocks positively impacted by the tariff news included steelmakers, with US Steel and Nucor both rising as much as 3%.
Tuesday’s stock market sell-off extended the painful decline from Monday, when the Nasdaq Composite dropped 4% in its worst day since 2022. Since the sell-off began in mid-February, the S&P 500 is down about 9% while the Nasdaq is off by about 13%.
After Trump placed a 25% tariff on Canada and Mexico on March 4 that was later suspended until April 2, Canada’s Prime Minister, Justin Trudeau, said he would place a 25% retaliatory tariff on $155 billion of American goods until Trump’s tariffs are withdrawn.
While Canada has not yet responded to Trump’s latest tariff increase, Trump also said that if Canada does not drop its own tariffs on US goods, he will “substantially increase” tariffs on cars coming into the US on April 2. He said this would “essentially, permanently shut down the automobile manufacturing business in Canada. Those cars can easily be made in the USA!”
Trudeau previously said ahead of the first round of 25% tariffs that Americans will feel the pain from Trump’s trade war.
“Because of the tariffs imposed by the U.S., Americans will pay more for groceries, gas, and cars, and potentially lose thousands of jobs,” Trudeau said. “Tariffs will disrupt an incredibly successful trading relationship.”
The tariffs Trump has placed so far on Canada, Mexico, and China have been intended to achieve the administration’s policy goals — particularly cracking down on drug and border policy. Trump said on March 6 that he would be pausing tariffs on Mexican goods for one month “out of respect” for Mexico’s president, Claudia Sheinbaum.
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