Trump unleashes chaos again with tariffs on Canadian steel and aluminum

WashingtonAnother chapter of chaos and confusion in Donald Trump's trade war. On Tuesday morning, Trump announced an additional tariff of 25% - up to 50%, since it is added to the 25% already announced and that will come into effect this Wednesday - on imports of steel and aluminum from Canada, in response to the decision of the government of the Canadian province in 2009 to apply a tariff of 25%. The stock markets turned red and closed with falls. Hours later, with the markets already closed, an official of his government said that only 25% would be applied, after Trump said that he "probably" would not double it.

And then came another nuance and told the executives of the main American companies that the tariffs applied this Wednesday could be higher than 25%. Trump, however, did not specify the exact figure or what type of tariffs he was talking about. "The tariffs are having a tremendously positive impact," the president told a business roundtable this afternoon, dismissing the stock market's reaction, adding, "The higher it is, the more likely they are to build."

In theory, the Trump administration's supposed backtracking on the extra increase came after the Canadian province of Ontario said it was withdrawing an electricity bill hike intended to respond to Trump's threats. In the morning, after the tycoon announced the tariffs, the Canadian province's premier, Doug Ford, told X that he would keep the surcharges on electricity purchases until Trump finally eliminated them. All new tariffs. The electricity tariffs would have hit especially hard the states of New York, Michigan and Minnesota, which import electricity from Canada.

Trump triggered stock market panic in the morning with a message on the Truth Social network, where he announced that the extra tariff would also come into effect on Wednesday. He also called on the Canadian authorities to eliminate the tariffs "of 250% and 390%" on various dairy products produced in the US. The American president also threatened to "substantially" increase tariffs on cars manufactured in Canada, which are due to come into effect on April 2, if Ottawa does not withdraw "other egregious tariffs".

Pressure on Canada

In this same post, Trump again insisted on the idea of Canada becoming the 51st state of the United States. "The only thing that makes sense is for Canada to become our beloved fifty-one state. This would completely eliminate all tariffs and any other issues," Trump said. The president has turned the trade war into his main diplomatic weapon to pressure other countries, although it seems that he is especially targeting Canada.

Last week, when Trump put the 25% tariffs on Canadian imports, the then Prime Minister of Canada, Justin Trudeau, accused him of wanting to "collapse" the Canadian economy so that he could annex the country more easily. Since Trump has been using this rhetoric to refer to his northern neighbor, tensions have only increased. Even so, despite pressuring him with the tariffs, the US president once again ended up backing down and put them on hold again until April 2.

Stock market crashes

In this context, the stock markets increased their losses on Tuesday. After a cautious start to the day after the fall experienced on Wall Street because Trump opened the door to the possibility of a recession due to his tariff policy, the markets have become discouraged. As the session progressed, the red colour gained ground. On the Spanish stock market, the Ibex 35 closed on Tuesday with a 1.57% drop and the loss of the 13,000 point mark.

At the close of trading, the main US indexes were still lower, although the nervousness had calmed down a little after it was announced that Ontario could reverse the surcharge on electricity delivered to the US. The main indicator of Wall Street, the Dow Jones, closed the session with a fall of 1.14%, the S&P 0.76% and the Nasdaq technology index 0.18%. Despite the 15.4% drop on Monday of Tesla, owned by the billionaire and political ally of Trump, Elon Musk, by late Tuesday it was up 3.79%.

In addition to fears of a recession, investors have more variables to pay attention to, such as the meeting of representatives of the US and Ukraine in Saudi Arabia to try to reach an agreement on the end of the war caused by the Russian invasion.

In the Ibex 35, the most penalized shares are those of Grifols –affected by the publication of a September report linked to the sanction for deficiencies in financial information–, Amadeus and IAG –the parent company of airlines such as Iberia and Vueling, affected by the reduction of the cuts in the cuts in the cuts in the US.

In any case, investors will continue to await what Trump may say about possible news regarding his tariff policy and the evolution of the negotiations on the war in Ukraine. Analysts remain concerned about the possibility of a recession, even more so after the president of the world's leading power spoke publicly.