President Trump escalated his fight with Canada on Tuesday, saying that he would double tariffs on steel and aluminum imports and threatening to inflict even more pain on one of America’s closest traditional allies as he pressed Canada to become part of the United States.
His comments sent jittery markets tumbling, with the S&P 500 down about 1 percent in early morning trading.
In a post on his social media platform, Mr. Trump wrote that Canadian steel and aluminum would face a 50 percent tariff, double what he plans to charge on metals from other countries beginning Wednesday. He said the levies were in response to an additional charge that Ontario placed on electricity coming into the United States, and he threatened more tariffs if Canada didn’t drop various levies it imposes on U.S. dairy and agricultural products.
“If other egregious, long time Tariffs are not likewise dropped by Canada, I will substantially increase, on April 2nd, the Tariffs on Cars coming into the U.S. which will, essentially, permanently shut down the automobile manufacturing business in Canada,” he threatened.
Mr. Trump went on to say that “the only thing that makes sense” is for Canada to become the 51st U.S. state.
The moves will significantly escalate a confrontation with one of America’s largest trading partners, and call into question Mr. Trump’s intentions for one of its closest allies. Canadian officials first thought Mr. Trump’s idea of absorbing Canada into the United State was a joke, but they have more recently begun to take the president’s threats seriously.
Last week, outgoing Prime Minister Justin Trudeau of Canada called Mr. Trump’s ostensible reason for imposing tariffs on Canada — to stop the flow of fentanyl into the United States — “completely bogus.”
Mr. Trudeau suggested that what Mr. Trump wanted to see was a collapse of the Canadian economy “because that’ll make it easier to annex us.”
“That’s never going to happen. We will never be the 51st state,” he said.
Mr. Trump spent much of his social media post on Tuesday essentially cajoling Canada to become part of America, writing: “This would make all Tariffs, and everything else, totally disappear. Canadians taxes will be very substantially reduced, they will be more secure, militarily and otherwise, than ever before, there would no longer be a Northern Border problem, and the greatest and most powerful nation in the World will be bigger, better and stronger than ever — And Canada will be a big part of that.”
“The artificial line of separation drawn many years ago will finally disappear, and we will have the safest and most beautiful Nation anywhere in the World,” he added.
In calls between Mr. Trump and Mr. Trudeau in early February, the American president told the Canadian prime minister that he did not believe that the treaty that demarcates the border between Canada and the United States was valid, according to people with knowledge of the conversations. He said he wanted to revise the boundary, and revisit the sharing of lakes and rivers between the two nations.
When questioned in a news conference in January about whether he planned to use military force to annex Canada, Mr. Trump replied that he would use “economic force.”
Last week, Mr. Trump hit Canada and Mexico with sweeping 25 percent tariffs on all imports, before walking some — but not all — of those levies back a few days later.
Mr. Trump said the higher metal tariffs on Canada would be a response to a surcharge on electricity it exports to the United States. On Monday, Ontario, Canada’s most populous province, retaliated against Mr. Trump’s tariffs by adding a 25 percent surcharge to the electricity it exports to Michigan, Minnesota and New York.
Canada is in the middle of a political transition as it prepares to swear in a new prime minister, Mark Carney, an economist and central banker, to replace Justin Trudeau, who announced in January that he would be resigning after almost 10 years in office. Mr. Trump’s move would punish the entire country for a retaliation measure taken on by one province.
Doug Ford, the premier of Ontario, said on Tuesday his government was examining a response to Mr. Trump’s latest statements. “If we go into a recession, it’s self-made by one person,” Mr. Ford said in an interview on MSNBC. “It’s called President Trump’s recession.”
In his post, Mr. Trump also targeted the Canadian dairy industry, saying that the country “must immediately drop their Anti-American Farmer Tariff of 250% to 390% on various U.S. dairy products, which has long been considered outrageous.”
The Canadian dairy industry has become a frequent target of Mr. Trump’s in recent weeks, although his description of those barriers is misleading. Canada allows a certain amount of U.S. dairy products to come in to the country tariff-free, as long as they don’t exceed certain import quotas, which increase every year. After imports hit a certain level, they are hit with high tariffs, for example 298.5 percent for butter. The system is known as a “tariff-rate quota.”
For a variety of reasons, American dairy exporters, who shipped about $1.1 billion of their products to Canada last year, have never exceeded those quotas, so those tariffs have never been activated. The United States also has tariff-rate quotas for some dairy imports, and other goods, though its tariffs tend to be much lower.
Mr. Trump also said Tuesday that he would declare “a national emergency on electricity within the threatened area” that would “allow the U.S. to quickly do what has to be done to alleviate this abusive threat from Canada.”
“They will pay a financial price for this so big that it will be read about in History Books for many years to come!” he said in a subsequent social media post.
Ryan Young, a senior economist at the Competitive Enterprise Institute, said that putting tariffs on foreign countries’ goods would almost always incite them to retaliate, increasing costs for consumers and worsening concerns about a recession. “Sometimes the only way to win is not to play,” he said. “This is true of nuclear war, and it is true of tariffs.”
Mr. Trump’s threats are the latest in a week of chaotic trade moves, in which the president startled investors and businesses that depend on trade with escalating tariff threats. The president imposed a 25 percent tariff on imports from Mexico and nearly all imports from Canada last Tuesday.
But Mr. Trump partially lifted the measure after stock markets sank and various industries pushed back. By Thursday, the president suspended those tariffs indefinitely for all products that comply with the North American free trade deal, U.S.-Mexico-Canada Agreement, or U.S.M.C.A. — about half of all imports from Mexico and nearly 40 percent of those from Canada.
The president has repeatedly promised that more tariffs are on the way. He has said that he would impose tariffs on foreign cars as well as “reciprocal” tariffs on foreign nations on April 2.
Eswar Prasad, a professor of trade policy at Cornell University and a former official at the International Monetary Fund, said that the threats against Canada would have important repercussions not just for the North American economies “but for the stability of the world order.”
“Trump’s aggressive tariff actions against a country long seen as a close U.S. economic and geopolitical ally puts the entire world on notice that strong historical relationships are no guarantee of future cordiality,” he said.
Matina Stevis-Gridneff, Vjosa Isai, Ian Austen and Danielle Kaye contributed reporting.
