(AFP) – US President Donald Trump said Tuesday he would “probably” reconsider doubling planned tariffs on Canadian steel and aluminum, hours after announcing the sharp hike. Trump’s step up to 50 percent levies initially came after the Canadian province of Ontario imposed an electricity surcharge on three US states that buy it; however, Ontario has suspended this decision after talks with Washington. Asked if the change would influence his decision on Canada tariffs, Trump told reporters: “I’m looking at that, but probably so.”
Trump’s threats came shortly before a midnight deadline for ramping up a globe-spanning trade offensive with 25 percent levies on steel and aluminum imports. The US dollar fell sharply on Tuesday, particularly against the euro, while markets fluctuated in volatile trading. Canadian Prime Minister-elect Mark Carney earlier vowed that his incoming administration would hit back with “maximum impact.” But Ontario has since agreed to halt the 25 percent fee on electricity exports to Michigan, Minnesota, and New York after Premier Doug Ford said he held “productive” talks with US Commerce Secretary Howard Lutnick. Ford, Lutnick, and US Trade Representative Jamieson Greer will meet in Washington on Thursday “to discuss a renewed USMCA ahead of the April 2 reciprocal tariff deadline,” according to a US-Canada joint statement, referring to the North American trade pact.
The upcoming steel and aluminum levies, which currently include no exceptions, threaten to affect everything from electronics to vehicles and construction equipment, and have manufacturers scrambling to find cost-effective domestic suppliers. Canada, historically among the closest US allies, had been facing the most aggressive action and has been the target of Trump’s ire on trade — and unprecedented questioning of and threats to its sovereignty. Canada supplies half of US aluminum imports and 20 percent of US steel imports, says industry consultant EY-Parthenon.
Trump said his supercharged tariffs were in response to Ontario’s electricity surcharge. He added on Truth Social that if Canada uses electricity as a bargaining chip, “they will pay a financial price for this so big that it will be read about in History Books for many years to come!” He also threatened to boost tariffs on cars from April 2, saying this would “essentially, permanently shut down the automobile manufacturing business in Canada.” Trump has vowed reciprocal levies as soon as April 2 to remedy trade practices Washington deems unfair, raising the potential for more products and trading partners to be specifically targeted.
Reacting to Trump’s announcement on MSNBC, Ontario Premier Doug Ford said the US president made “an unprovoked attack on our country, on families, on jobs.” Trump, meanwhile, backed up his tariff threats by stating again that Canada should be absorbed. The “only thing that makes sense” is for Canada to join the United States as a 51st state, he said. “This would make all Tariffs, and everything else, totally disappear.”
Former US Treasury Secretary Larry Summers said on X that Trump’s tariff threats on Canada would be “a self-inflicted wound to the US economy that we cannot afford, at a moment when recession risks are rising.” Trump on Tuesday played down fears over the economy, stating he does not see a recession coming while dismissing losses on Wall Street. If some companies were bracing for a damaging period of higher production costs, others sensed an opportunity. Drew Greenblatt, owner of Baltimore-based metal product manufacturer Marlin Steel, said incoming levies on imported steel have already boosted his new orders. “We only use American steel, so we’re thrilled with the tariffs,” he told AFP, adding that these helped him gain an edge over a competitor.
For Robert Actis, whose firm makes stucco netting used in construction, the expanded scope of incoming levies is a relief. Currently, a business like his imports wire for manufacturing, facing added tariff costs. But foreign-made finished products could enter the US market. With incoming levies covering a range of finished metal products too, Actis said this levels the playing field. However, higher import costs will likely ripple through the economy. A major US maker of steel products warned that American steel prices would surge to match the elevated costs of foreign goods. Supply constraints nudge prices up too, making items like nails, for example, more expensive as much of their cost is in original steel. Purchasers in industries like homebuilding would therefore end up spending more and could pass costs to consumers, making homes less affordable.
– Beiyi SEOW with Michel COMTE in Ottawa
© 2024 AFP
