Canada to impose retaliatory tariffs on $29.8-billion worth of U.S. steel, other goods, source says

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Canada is imposing counterlevies on $29.8-billion worth of aluminum, steel and other U.S. goods, a federal source said.

The list of other goods is being finalized and will be announced at news conference this morning by Finance Minister Dominic LeBlanc, Foreign Affairs Minister Mélanie Joly and Industry Minister François-Philippe Champagne, the source said.

The Globe is not identifying the source who was not authorized to discuss internal matters.

The United States has imposed 25-per-cent tariffs on imports of aluminum and steel, as President Donald Trump erects a stiff new economic barrier to foreign-produced goods, saying it will stimulate domestic output.

The tariffs apply to all countries, including Canada, Mexico and Australia, undoing previous exemptions granted to close U.S. trading partners. They were first announced last month and went into effect early Wednesday morning.

The White House did not double the tariffs on Canada to 50 per cent, as Mr. Trump had briefly pledged to do on Tuesday morning in a chaotic day of threats and last-minute deal-making. The president changed course after Ontario Premier Doug Ford suspended a 25-per-cent export surcharge on electricity exports to the U.S., in a temporary compromise brokered with U.S. Commerce Secretary Howard Lutnick.

It marks the second time in a decade that Mr. Trump has slapped punishing levies on Canadian steel and aluminum. Stock markets have retreated on those plans, with share price losses on Monday and Tuesday that accompanied rising fears voiced by economists that a recession may loom.

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The Peterson Institute for International Economics calculated that Mr. Trump’s first-term steel and aluminum tariffs cost domestic consumers roughly US$650,000 per job saved. The U.S. today imports roughly half its aluminum and between a fifth and a quarter of its steel.

Mr. Trump on Tuesday brushed aside concerns about economic damage from his policies. He has promised more tariffs to come.

In early April, the Trump administration is planning to impose a wave of what it calls “reciprocal” tariffs on trading partners. These are meant to match the tariffs other countries place on U.S. goods, as well as non-tariff barriers that the U.S. says disadvantage American companies. Mr. Trump has also threatened across-the-board 25-per-cent duties on Canadian imports, paused until then. It’s not clear whether those will layer on top of whatever other tariffs Washington announces next month.

Tuesday repeated what is, by now, a familiar pattern for politicians and investors: A new threat to free trade, followed by panic, followed by a pause that temporarily takes the temperature down.

On Monday, Ontario announced a 25-per-cent surcharge on exports of electricity, to be paid by residents of Michigan, Minnesota and New York. Early Tuesday, Mr. Trump took to social media to accuse Canada of “stooping so low as to use electricity” as a retaliatory measure. As a way of striking back, he announced that Canada, alone among the many countries targeted by Wednesday’s 25-per-cent metals tariffs, would be hit with levies on its steel and aluminum of 50 per cent – double the originally planned rate.

Because the tariffs were set to start in less than 24 hours, the new threat created uncertainty. Yet within five hours, Mr. Ford and Mr. Lutnick released a joint statement saying Ontario would pause its surcharge, and the two men agreed to meet in Washington on Thursday, along with the United States Trade Representative, Jamieson Greer, “to discuss a renewed United States-Mexico-Canada Agreement ahead of the April 2 reciprocal tariff deadline.”

Despite the cooler heads at day’s end, investors remain on edge. Late Tuesday, Mr. Trump reiterated his recent commentary about not fretting over the stock market’s reaction to his tariff agenda.

“Markets are going to go up, they’re going to go down,” he said dismissively on the White House lawn. “Long term, what I’m doing is making our country strong again. Financially strong. Militarily strong.”

The S&P 500 Index, which is the U.S. benchmark, closed down again Tuesday, dropping another 0.7 per cent. The index is now off 3.6 per cent since Mr. Trump was elected in early November as investors rethink their optimism about his promise of a pro-growth agenda.

Tariffs were a core campaign promise for Mr. Trump, and his threats to Canada began not long after election day. He has also complained about Canada’s trade practices in other specific industries, such as dairy and lumber.

Speaking to reporters, Mr. Ford said he agreed to suspend, but not completely withdraw, his electricity surcharge after taking a call from Mr. Lutnick, who invited him to Washington to meet. (As Commerce Secretary, Mr. Lutnick is the U.S. President’s point person on tariffs.)

“Secretary Lutnick sent out an olive branch to us,” Mr. Ford said, inviting him to meetings to “discuss the future” rather than waiting until the April 2 deadline that the President had set for the imposition of 25-per-cent tariffs on most Canadian products.

“Rather than waiting till April 2, threats going back and forth, tit for tat, I agreed to suspend, temporarily – we always have that tool in our tool kit – until we sit down over the next day or two,” Mr. Ford said.

However, there is no guarantee that Thursday’s talks will do much to change Mr. Trump’s views on tariffs against Canada. On Tuesday, the President repeated his claim that the U.S. subsidizes Canada and insisted that America does not need Canadian cars or lumber or energy. He also said Canada does not spend enough on defence.

“Frankly, the way that it’s solved is Canada should honestly become our 51st state. We wouldn’t have a northern border problem, we wouldn’t have a tariff problem,” Mr. Trump said.

If such commentary was designed to scare Canadians into submission, the opposite has played out, and many Canadians have rallied together to defend their sovereignty.

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Incoming prime minister Mark Carney, whose government will be sworn in within days, has called tariffs an attack on Canadian workers, families and businesses. He repeated on social media what he told Liberal leadership voters Sunday night: that a Carney-led government will impose tariffs that have “maximum impact in the U.S. and minimal impact here in Canada.”

Canada already had $30-billion in retaliatory tariffs in place, and will levy an additional $125-billion if Mr. Trump follows through on his tariff escalation in April.

Mr. Carney’s sentiments were echoed by Conservative Leader Pierre Poilievre, who called for retaliatory tariffs when Mr. Trump threatened to double his tariffs.

“If President Trump is applying 50-per-cent tariffs on our steel and aluminum, then Canada must hit back with 50-per-cent tariffs on all steel and aluminum imported from the United States,” Mr. Poilievre said. “If the President applies further tariffs as he has threatened, we will hit back on those as well,” Mr. Poilievre said.

In Mr. Trump’s first term, he imposed 25-per-cent tariffs on foreign steel and a 10-per-cent tariff on aluminum imports. For Canada, Mexico and the European Union, those levies lasted from May, 2018, until May, 2019. (Other countries also faced steel tariffs for varying lengths of time.)

From its glory days in the 1960s to the early aughts, the U.S. steel industry lost about three-quarters of its jobs, according to research published in the American Economic Review. Yet during that time, output per worker quintupled.

And while some production jobs may be created through tariffs, they must also be weighed against any jobs that are shed by knock-on manufacturers who use steel or aluminum as primary inputs. For all of Mr. Trump’s talk about foreign countries paying for the tariffs, past episodes have shown that producers absorb at least some of the added costs.

These knock-on effects could be even more widespread this time around because Mr. Trump has raised his tariff on aluminum to 25 per cent. On Tuesday, Bill Oplinger, the chief executive of aluminum giant Alcoa, went on U.S. cable news to warn again about the likelihood of higher prices on everything from cars to beer cans.

With reports from Robert Fife, Stephanie Levitz and Niall McGee