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Canada imposes retaliatory tariffs on $20 billion worth of US goods

 

Europe swiftly hit back at Trump’s sweeping levies on metals and now America’s northern neighbor is doing the same in a major escalation of the trade war
Steel coils at the ArcelorMittal Dofasco steel production facility in Hamilton, Ontario. Canada is one of the main sources of aluminum and steel shipped to the US. Nick Iwanyshyn/The Canadian Press/AP

Steel coils at the ArcelorMittal Dofasco steel production facility in Hamilton, Ontario. Canada is one of the main sources of aluminum and steel shipped to the US. Nick Iwanyshyn/The Canadian Press/AP

CNN — President Donald Trump imposed sweeping 25% tariffs on all steel and aluminum imported into the United States Wednesday, a policy aimed at leveling the playing field for US manufacturing but a move that threatens to drive up prices on a broad range of consumer and industrial goods for Americans.

It’s the latest salvo in Trump’s multifaceted tariff plan aimed at correcting perceived trade imbalances and reigniting domestic industry. But it risks igniting a global trade war. The European Union, hit for the first time by higher US tariffs since Trump returned to the White House, retaliated within hours with countermeasures on US goods exports. And later Wednesday morning, Canada announced over $20 billion in retaliatory measures as well.

The tariffs on steel and aluminum mark the first time in Trump’s second term that a set of tariffs has been applied to all countries.

Imposing steel and aluminum tariffs poses a risky bet: Although it could give America’s steel and aluminum industries a boost, it will raise prices on a key ingredient for American manufacturers, which could be passed on to consumers. The costs could outweigh the benefit.

That’s what happened in Trump’s first term: Although Trump’s 2018 metals tariffs expanded US production modestly, it sent costs rising for cars, tools and machines and shrank those industries’ output by more than $3 billion in 2021, the International Trade Commission found in a 2023 analysis.

It could also backfire on the industries it’s designed to protect: Trump’s tariffs could cost 100,000 American jobs, including 20,000 from the aluminum industry, William Oplinger, CEO of Alcoa, one of the largest US aluminum makers, warned last month.

 

Steel coils at the ArcelorMittal Dofasco steel production facility in Hamilton, Ontario. Canada is one of the main sources of aluminum and steel shipped to the US.
Steel coils at the ArcelorMittal Dofasco steel production facility in Hamilton, Ontario. Canada is one of the main sources of aluminum and steel shipped to the US. 
Nick Iwanyshyn/The Canadian Press/AP
 

Trump 2.0’s first worldwide tariff escalation

Before Wednesday, Trump had only enacted tariffs that applied to China, Mexico and Canada this term. In the case of Mexico and Canada, businesses can avoid paying tariffs through April 2 if they comply with the USMCA.

Canada announced a series of retaliatory measures on Wednesday morning that are set to take effect on Thursday, which includes 25% tariffs on $29.8 CAD billion ($20.1 billion) imports of US goods such as steel and aluminum products.

Canada also targeted billions of dollars worth of imports from the US of computers, sporting equipment and cast iron products.

“We will continue to maintain our countermeasures and increase them on April 2nd,” Finance Minister Dominic LeBlanc said Wednesday. LeBlanc is set to travel to Washington tomorrow to meet with US Commerce Secretary Howard Lutnick Thursday.

“The conversation tomorrow will be around lowering the temperature and focusing on the process that President Trump set up, where Secretary Lutnick has up to April 2nd to determine a series of global tariff decisions,” he added. April 2 is the date the administration said reciprocal tariff actions will be announced across many countries.

The EU responded to the “unjustified” tariffs Wednesday by unveiling countermeasures on up to €26 billion ($28 billion) worth of American goods exports, including tariffs on boats, bourbon and motorbikes. The measures, which will come into force in April, are “swift and proportionate,” it said in a statement.

The US was the second-biggest destination for the EU’s iron and steel exports last year, according to official figures released Wednesday. In 2023, the latest year for which data is available, it was also the second-largest buyer of European aluminum.

However, the latest tariff hikes do not “move the (macroeconomic) needle much for Europe,” S&P Global Ratings said earlier this month, after the 25% duties were announced. China has replaced the US as the top export destination for steel and aluminum, it added in a note.

Shortly before the tariffs went into effect, Australian Prime Minister Anthony Albanese criticized them as “entirely unjustified” and “against the spirit of our two nations’ enduring friendship,” but said Canberra will impose no reciprocal levies.

“Tariffs and escalating trade tensions are a form of economic self-harm and a recipe for slower growth and higher inflation,” he said in a statement. “This is why Australia will not be imposing reciprocal tariffs on the United States.”

Steel tariffs of 25% launched in Trump’s first administration and continued by former President Joe Biden resulted in American importers shifting to other sources.

However, the Biden administration had allowed for exceptions on the duties from US allies, including Canada, Mexico, Japan and South Korea. Trump’s latest action reverses that with no exceptions on any countries’ steel imports to the US. The same applies for aluminum, with rates climbing to 25% from 10%.

China is the only country whose aluminum and steel will be tariffed at rates higher than 25%. That’s because a 20% across-the-board tariff on Chinese imports was already in effect prior to Wednesday, and the 25% steel and aluminum tariffs will be tacked on top of that, bringing the total tariff rate to 45% on steel and aluminum from there.

America imports very little steel directly from China, by far the world’s largest producer of steel.

Yet Chinese steel does make its way into the United States secondhand. Some is purchased by foreign countries and reshipped to the US. And some of it is mislabeled and resold through various channels.

From cars to appliances, steel and aluminum are critical inputs

While Trump’s aim is to hurt the Canadian economy by imposing higher steel and aluminum tariffs on them, the move risks hurting the American economy as well.

In total, the US imported $31.3 billion worth of iron and steel and $27.4 billion of aluminum last year, according to data from the US Commerce Department. (The government data groups iron and steel together.)

Canada was the top source of iron, steel and aluminum sent to the US last year, with the US importing $11.4 billion worth of aluminum and $7.6 billion worth of iron and steel from there.

With aluminum, other top foreign sources shipping to the US include China, Mexico and the United Arab Emirates. With steel, Brazil, Mexico and South Korea are top sources, according to US trade data from last year.

 

Workers transport aluminum rods at a factory in Binzhou, in eastern China's Shandong province, in February 2025. Tariffs on aluminum shipped from China to the US rose to 45% this week.
Workers transport aluminum rods at a factory in Binzhou, in eastern China's Shandong province, in February 2025. Tariffs on aluminum shipped from China to the US rose to 45% this week. AFP/Getty Images
 

Aluminum and steel are used heavily in an extensive list of goods. Tariffs on both metals could significantly raise prices for Americans.

For example, cars contain hundreds, if not thousands, of pounds of steel and aluminum. So, while Trump said his “substantially” higher auto tariffs will “shut down” the auto industry in Canada, they are more likely to backfire on US auto production, given how intertwined the North American car supply chain is.

Appliances, machinery, infrastructure, medical devices, cans and power lines are all among the many commonly used products that also rely on steel and aluminum. And to prevent companies from importing finished goods to skirt tariffs, as many did during Trump’s first term, this round of tariffs includes many items manufactured with steel and aluminum.

Even before Wednesday, the prospect of higher tariffs on steel and aluminum led to sharp increases in market-traded spot prices for the metals, said Phil Gibbs, an analyst at KeyBanc.

The price of domestic steel is up more than 30% in the last two months, he said, while the domestic price of aluminum has risen about 15%.

Many large industrial customers might be protected from those price increases in the near term because of long-term contracts they’ve locked in, but should the steel and aluminum tariffs stay in place, they can expect to pay more even if the products they are buying come from domestic mills.

And the tariffs are likely to affect not only the raw products being imported but also the cost of imported parts made using the metals. For instance, the price of an aluminum bumper or radiator purchased by an automaker from a Canadian or Mexican parts supplier would likely increase.

On again, off again

Trump’s policy has had plenty of fits and starts. Hours before enacting the latest tariffs, Trump reversed a threat to double the rate on steel and aluminum from Canada, the US’s top source of imports for the metals. Instead, steel and aluminum from there will be subject to the 25% levy.

“It may go up higher,” Trump said Tuesday of the 25% tariffs on all countries’ steel and aluminum sent to the US at an event hosted by the Business Roundtable. “The higher it goes, the more likely it is they’re going to build,” he said, referring to more companies moving their production to the US.

Trump backed off his threat to double the steel and aluminum tariff rates for Canada after Ontario Premier Doug Ford agreed to pause surcharges on electricity for US customers.

Ford and US Commerce Secretary Howard Lutnick announced they’d meet Thursday, along with Canadian Finance Minister Dominic LeBlanc, to renegotiate the free trade treaty known as the USMCA.

This story has been updated with additional reporting and context.

CNN’s Chris Isidore, Paula Newton, Angus Watson, Edward Szekeres, James Legge and Olesya Dmitracova contributed reporting.

Author: Editors Desk

Source: CNN:::

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