March 12, 2025 – 9:09 AM PDT - The tariff standoff between the United States and Canada has taken yet another dramatic turn, leaving businesses, consumers, and markets on edge as both nations trade economic blows in a rapidly escalating trade war. Just yesterday, President Donald Trump’s threat to impose 50% tariffs on Canadian steel and aluminum sent shockwaves across North America—only for the administration to reverse course hours later. Today, Canada has fired back, announcing new retaliatory tariffs on U.S. goods, signaling that the truce was short-lived. Here’s the latest on this chaotic economic saga and what you need to know.
The Latest Updates: A Rollercoaster of Tariffs
On Tuesday, March 11, President Trump took to Truth Social, declaring an additional 25% tariff hike—bringing the total to 50%—on Canadian steel and aluminum imports, set to take effect at midnight. The move was framed as retaliation to Ontario Premier Doug Ford’s imposition of a 25% surcharge on electricity exports to Michigan, Minnesota, and New York, itself a response to earlier U.S. tariffs. Markets plummeted, with the Dow dropping 478 points by day’s end, as investors braced for a deepening trade conflict.
But in a stunning reversal just hours later, Trump backed off the 50% threat after Ford suspended the electricity surcharge. A joint statement from U.S. Commerce Secretary Howard Lutnick and Ford promised a Thursday meeting to renegotiate aspects of the U.S.-Mexico-Canada Agreement (USMCA). The White House confirmed that the previously scheduled 25% tariffs on steel and aluminum from Canada—and all trading partners—would still proceed without exemptions as of midnight, March 12.
Today, Canada has upped the ante. Prime Minister Mark Carney, who assumed office this week following Justin Trudeau’s departure, announced C$29.8 billion (roughly US$20.6 billion) in retaliatory tariffs on U.S. goods, effective immediately. This follows an earlier wave of C$30 billion in duties launched on March 4, with threats of further escalation to C$155 billion if U.S. tariffs persist. Targeted U.S. exports include orange juice, coffee, steel, and motor vehicles—items poised to hit American producers and consumers alike.
What’s Driving the Conflict?
At the heart of this tariff war is President Trump’s aggressive trade agenda, a cornerstone of his second term. Since February, he has rolled out sweeping tariffs—25% on most imports from Canada and Mexico, 10% on China—citing the need to curb illegal immigration, fentanyl trafficking, and trade deficits. Canada, the U.S.’s largest trading partner with over $2.5 billion in daily cross-border trade, has been a prime target. Trump has also repeatedly taunted Canada, suggesting it become the “51st state” to eliminate trade barriers—a notion Canadian leaders have fiercely rejected.
Canada’s response has been swift and strategic. The initial C$30 billion in tariffs, implemented earlier this month, aimed to mirror U.S. duties while pressuring Trump to back down. Yesterday’s brief de-escalation suggested a potential thaw, but today’s announcement of an additional C$29.8 billion in levies underscores Canada’s resolve to protect its economy. Carney called the U.S. actions “an attack on Canadian workers,” vowing to maintain pressure until “credible commitments to free and fair trade” are secured.
What to Know: Economic Fallout and Uncertainty
The tariff tit-for-tat is already rattling North American economies. Economists warn that the 25% U.S. tariffs on Canadian steel and aluminum, now in effect, will raise costs for American manufacturers—from automakers to construction firms—likely passing those hikes onto consumers. Canada’s retaliatory measures threaten U.S. jobs in export-heavy sectors like agriculture and manufacturing, with Ontario’s earlier electricity threat alone risking $100 monthly bill increases for U.S. households.
Financial markets remain jittery. After Tuesday’s rollercoaster, the S&P 500 teeters near correction territory, down nearly 10% from its February peak. Experts like former Treasury Secretary Larry Summers have dubbed Trump’s tariff threats “the worst trade policy yet,” predicting a “self-inflicted wound” that could tip the U.S. into recession—a risk JPMorgan now pegs at 40% for 2025.
For Canada, the stakes are existential. Trade with the U.S. accounts for 67% of its GDP, and prolonged tariffs could devastate industries like auto manufacturing, which Trump has threatened with further duties on April 2. Yet, Canada’s defiance has sparked rare political unity, with Carney rallying support to “stand up to Trump.”
What’s Next?
All eyes are on the Lutnick-Ford meeting in Washington, though hopes for a breakthrough are tempered by today’s Canadian tariff rollout. Trump has hinted at additional “reciprocal tariffs” in April, targeting nations with high duties on U.S. goods, which could widen the trade war’s scope. Meanwhile, Canada has challenged U.S. tariffs at the World Trade Organization and under USMCA rules, setting the stage for a protracted legal battle.
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