Key Takeaways
President Trump has ordered global tariffs on imports of steel and aluminum of 25%.
Canada is the largest source of imported steel and aluminum into the United States.
After some jockeying, which included threats by the Ontario premier to levy a 25% surcharge on electricity delivered to bordering states in the United States, the premier and Commerce Secretary Lutnick agreed to further discussions on revisions to the USMCA.
Besides Canada, other nations, including China and the EU, have also targeted tariffs on products from the United States in response to Trump’s tariffs.
Trump has said he is looking for reciprocal trade treatment between countries worldwide, pointing to significant disparities.
President Trump imposed a 25% global tariff on steel and aluminum imports that went into effect on March 12, affecting imports from allies such as Canada, Mexico, Europe, and China. That came a day after a tit for tat exchange with the Canadian province of Ontario — whose Premier imposed a 25% surcharge on electricity exports to New York state, Michigan, and Minnesota — and President Trump, who threatened to increase his 25% tariff on steel and aluminum to 50%. Both parties had withdrawn from their initial stance by the end of day Tuesday, March 11. Nevertheless, Trump’s 25% tariff is in effect, with Canada being the most affected due to its significant aluminum exports to the United States.
Trump’s Steel and Aluminum Tariffs
President Trump imposed a 25% tariff on steel imports on all countries, and raised his 2018 aluminum tariffs from 10% to 25%, without exceptions or exemptions, as part of his focus to narrow the U.S. trade deficit and strengthen domestic industry. While some American companies oppose President Trump’s tariffs, leaders of steel and aluminum companies welcome them as they believe they have been harmed by unfair trade. Most of the steel used by American firms is domestically produced, according to a 2022 Congressional Research Service report — but the percentage of aluminum imports used by U.S. firms is a lot larger. Canada is the largest foreign supplier of steel, aluminum, and uranium to the United States. It has 34 critical minerals and metals that the U.S. Defense Department wants for national security reasons.
Trump called on Canada to drop duties on American dairy products that are between 250% and 390%, and threatened to “substantially increase” tariffs on cars imported into the United States if the nation did not drop “other egregious, long-time tariffs.” About a third of Canada’s trade to the United States is in energy. Nearly $2.7 billion worth of goods and services cross the border each day and Canada is the top export destination for 36 U.S. states.
U.S. Allies Retaliate Against the Tariffs
Due to Trump’s tariffs on Canadian non-UMSCA goods that went into effect in early March, the Canadian government had placed $21 billion worth of tariffs on items like American orange juice, peanut butter, coffee, appliances, footwear, cosmetics, motorcycles and certain pulp and paper products. More Canadian tariffs will come over the course of 21 days to reach $107 billion in American goods. The European Union announced retaliatory tariffs on $28 billion-worth of a wide range of U.S. goods imported to Europe such as boats, motorbikes, and alcohol (effective April 1), with additional countermeasures to be introduced in mid-April.
China, the world’s largest steel producer and second-largest economy, retaliated after Trump imposed a 20% blanket tariff on Chinese goods. New Chinese levies that took effect on March 10 include a 15% tariff on chicken, wheat, corn, and cotton, and a 10% tariff on sorghum, soybeans, pork, seafood, beef, fruits, vegetables, and dairy products. China’s foreign ministry accused the U.S. of violating World Trade Organization rules and said it would take “all necessary measures” to protect its rights and interests.
Australia, which had been hoping for the same exemption from steel and aluminum tariffs it received during the first Trump administration, said it would not retaliate. While Australian Prime Minister Anthony Albanese called the tariff “entirely unjustified,” he said that imposing reciprocal tariffs “would only push up prices for Australian consumers,” and that Australia would impose no new tariffs on U.S. goods. Other countries like South Korea and Britain are looking to renegotiate trade deals.
Ontario’s Electric Surcharge Tabled
Ontario Premier Doug Ford suspended the surcharge after a discussion with U.S. Secretary of Commerce Howard Lutnick and they announced in a joint statement posted on X, that they would meet alongside the U.S. trade representative to discuss renewing the U.S.-Mexico-Canada free trade act (USMCA). Ontario’s surcharge on electricity would have affected 1.5 million American businesses and homes in Minnesota, Michigan and New York. Ontario’s Premier Doug Ford estimated it would have added about $69 a month to the bills of each American household affected and generated revenue for Canada of $206,730 to $275,640 per day.
Electricity is the fourth-largest energy commodity traded between Canada and the United States, preceded by oil, natural gas, and petroleum products, respectively. Energy products from Canada that are not USMCA-compliant face a 10 percent tariff. Electricity imports from Canada peaked in 2020 and have declined since, but several U.S. cities still benefit from them. For example, in 2024, Buffalo imported 11.7 million megawatt hours of electricity. New York state has interties with Ontario’s Independent Electricity System Operator (IESO) for up to 2500 megawatts of imports from Ontario and an additional 2100 megawatts through its interties with Hydro-Québec (HQ). In 2023, net imports from HQ and IESO totaled 6,628 gigawatt hours.
According to David Blackmon, by Canada’s constitution, Ontario cannot levy an export tax because that is solely within the federal government’s jurisdiction. Ontario and Quebec may negotiate contracts with American states, but Ottawa approves and regulates cross-border trade through the Canada Energy Regulator (Formerly the National Energy Board).
New England Dependent on Canadian Energy
The U.S.-Canadian tariff war could hit New England hard since the area relies heavily on Canadian energy exports. According to the New England-Canada Business Council, New England imports about $10.2 billion of heating oil, diesel fuel, natural gas and electricity from Canada annually. New England imports about 5-6% of its electricity from Canada, though some areas like Vermont and parts of Northern Maine import more. According to the Canadian Consulate, 90% of Boston Logan International Airport’s jet fuel comes from Canada. Currently, there is a lack of clarity in knowing how much of that energy is actually affected by Trump’s current tariffs since it is unclear which Canadian’s energy imports are non-USMCA compliant and whether Trump’s tariffs can even affect electricity imported from Canada — issues that should eventually be clarified.
Trump’s 10% tariff on non-USMCA energy would increase the cost of heating oil, propane and other delivered fuels, which New England depends on since most of its supply comes from Canada. About 82% of all U.S. households that heat with oil and propane are concentrated in the Northeast. In New England alone, more than 2.3 million households use these fuels. If diesel fuel prices rise, the added overhead costs could drive retail fuel prices higher. Much of New England’s gasoline and diesel comes from a refinery in New Brunswick.
Most of the natural gas used in New England comes from domestic sources, but the region does import a small amount of natural gas from Canada — most of which is liquified and comes through the St. John terminal in New Brunswick, where it’s turned back into a gas and sent through a pipeline down to New England.
Conclusion
President Trump imposed 25% tariffs on global imports of steel and aluminum effective on March 12. Some countries have retaliated with their own tariffs while others are looking to renegotiate trade deals. The tit for tat between Ontario’s Premier that would have imposed a 25% surcharge on electricity exports to New York, Michigan and Minnesota, and President Trump who was going to retaliate by doubling his tariffs on Canadian steel and aluminum from 25% to 50% was tabled to discuss changes to the USMCA instead. Besides the steel, aluminum, and metals tariffs on Canada, President Trump has a 10% tariff on energy imports from Canada that are not USMCA compliant and a 25% tariff on non-USMCA compliant Canadian goods.
