US President Donald Trump faces increased pressure to stimulate economic growth after a brutal market selloff on Monday indicated rising recession risks.
US President Donald Trump announced on Tuesday he intends to double planned tariffs on Canadian steel and aluminium from 25% to 50%.
In a post on his social media platform Truth Social, he said the tariffs are set to take effect on Wednesday, calling the decision a response to the price increases that the provincial government of Ontario put on electricity sold to the United States.
“I have instructed my Secretary of Commerce to add an ADDITIONAL 25% Tariff, to 50%, on all STEEL and ALUMINUM COMING INTO THE UNITED STATES FROM CANADA, ONE OF THE HIGHEST TARIFFING NATIONS ANYWHERE IN THE WORLD,” he wrote.
After a brutal stock market selloff on Monday and further jitters Tuesday, Trump faces increased pressure to show he has a legitimate plan to grow the economy instead of pushing it into a recession.
Renewed calls to make Canada ’51st state’
The US President has said his separate 25% tariffs are about fentanyl smuggling and voicing objections to Canada putting high taxes on dairy imports that penalise US farmers. But he also called again for Canada to become part of the United States as its “51st state,” saying “this would make all tariffs, and everything else, totally disappear.”
Ontario Premier Doug Ford, after responding to Trump by raising electricity prices, said Tuesday on MSNBC that the U.S. people and its business leaders needed to speak up against the “chaos” caused by Trump’s launching of a trade war.
“If we go into a recession it’s self made by one person. It’s called President Trump’s recession,” Ford said. “It shouldn’t be this way. We should be booming, both countries.”
Trump condemned the use of electricity “as a bargaining chip and threat,” saying in a separate social media post on Tuesday that Canada “will pay a financial price for this so big that it will be read about in History Books for many years to come!”
Ontario provides electricity to Minnesota, New York and Michigan and Trump pledged to declare a national emergency in those states.
Mexico has also been targeted with 25% tariffs because of the president’s dissatisfaction over drug trafficking and illegal immigration, though he suspended the taxes on imports that are compliant with the 2020 USMCA trade pact for one month.
Asked if Mexico feared it could face the same 50% tariffs on steel and aluminium as Canada, President Claudia Sheinbaum, said “No, we are respectful.”
Recession risks on the rise
The investment bank Goldman Sachs revised down its growth forecast for this year to 1.7% from 2.2% previously. It modestly increased its recession probability to 20% “because the White House has the option to pull back policy changes if downside risks begin to look more serious.”
Trump has tried to assure the public that his tariffs would cause some “transition” to the economy, with the taxes prodding more companies to begin the years-long process of relocating factories to the United States to avoid the tariffs. But he set off alarms in an interview broadcast on Sunday in which he didn’t rule out a possible recession.
“I hate to predict things like that,” Trump said on Fox News. “There is a period of transition, because what we’re doing is very big. We’re bringing wealth back to America. That’s a big thing. And there are always periods of — it takes a little time. It takes a little time. But I don’t — I think it should be great for us. I mean, I think it should be great.”
The promise of great things ahead did not eliminate anxiety, with the S&P 500 stock index tumbling 2.7% on Monday in an unmistakable “Trump slump” that has erased the market gains that greeted his victory in November 2024. The S&P 500 index fell roughly 1% in Tuesday afternoon trading.
