The U.S.-Canada trade war intensified this week as President Donald Trump briefly doubled metals tariffs to 50% before backtracking hours later, injecting fresh uncertainty into financial markets. The abrupt reversal followed Ontario Premier Doug Ford’s threat to impose a 25% surcharge on electricity exports to the U.S.—a move suspended after Trump reverted to previously planned 25% tariffs on all steel and aluminum imports from Canada and other nations, effective March 12.
Markets whipsawed as the S&P 500 briefly entered correction territory, plunging 10% from its February peak and erasing nearly $5 trillion in U.S. stock value since January. Aluminum prices surged to record highs amid the turmoil, while businesses warned of chilling effects on consumer spending. Trump defended the tariffs as a tool to revive domestic manufacturing, claiming they would “throw off a lot of money” and pressure companies to relocate jobs to the U.S.
The clash unfolded as Canada’s Prime Minister Justin Trudeau prepared to transfer power to successor Mark Carney, who has yet to engage with Trump. Ontario’s Ford and Alberta officials offered pathways to de-escalation, but White House press secretary Karoline Leavitt criticized Canada’s initial electricity threat as “egregious,” vowing to prioritize U.S. energy independence.
With reciprocal auto tariffs looming in April and consumer confidence eroding, economists warn the tit-for-tat measures risk derailing economic stability. A New York Fed survey revealed growing pessimism among households, while small business sentiment hit a post-election low.