Trump hikes steel and aluminum tariffs to 50%

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U.S. President Donald Trump has jacked up steel and aluminum tariffs to 50 per cent, an escalation of his global trade war that will disproportionately hammer the Canadian economy.

Intergovernmental Affairs Minister Dominic LeBlanc rushed to Washington Tuesday in a last-ditch bid to plead Canada’s case with U.S. Commerce Secretary Howard Lutnick. But Mr. Trump signed an executive order raising the levies shortly after, with the new rate taking effect at 12:01 a.m. Wednesday.

The President first imposed the tariffs at 25 per cent in March. Canada is the largest supplier of both steel and aluminum to the United States, accounting for about half of aluminum imports last year and nearly 25 per cent of steel imports in 2023.

Mr. Trump has said his goal is to stop imports of the metals into the U.S. in a bid to return manufacturing jobs to his country. The tariffs could, however, backfire on the U.S. by inflating prices for consumers.

Mr. LeBlanc and Kirsten Hillman, Canada’s ambassador to the U.S., met for an hour with Mr. Lutnick shortly before the Commerce Secretary headed over to the White House.

Afterward, Mr. LeBlanc described the meeting as “positive” and “friendly,” and said that Mr. Lutnick listened carefully and took notes as the Canadians made the case that the tariffs are hurting both countries.

“Tariffs of 25 per cent are, in our view, unacceptable. Raising them by another 25 per cent will be very difficult for the Canadian and U.S. economies,” Mr. LeBlanc said.

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The minister declined to say whether Mr. Lutnick had outlined any specific demands of Canada. “That’s part of our conversation,” he said, adding that such details are “private.”

Ms. Hillman said she had pitched Canada as an ally to the U.S. in efforts to end dumping of subsidized steel by other countries. “We’re talking about a way to address the U.S. concerns around some of the global issues around the commodities that are overproduced and then dumped around the world,” she said.

Mr. Lutnick also emerged to greet Canadian reporters waiting outside the Commerce Department, but did not answer questions. “I just came to say hello,” he said.

Neither Mr. LeBlanc nor Prime Minister Mark Carney’s office responded to questions on whether Canada would retaliate against the higher U.S. tariffs.

In a statement, Mr. Carney said the tariffs are “unlawful and unjustified” and his government is “engaged in intensive and live negotiations” to have all levies lifted as part of an economic and security deal with the U.S.

“We are fighting to get the best deal for Canada, and we will take the time necessary, but no longer,” he said.

Ottawa imposed retaliatory tariffs on Washington in March but Mr. Carney lifted many of those the following month out of fear of raising prices for consumers. According to an estimate by Oxford Economics this week, more than half of U.S. steel imported into Canada is currently exempt from retaliatory tariffs.

Finance Minister François-Philippe Champagne, speaking Tuesday ahead of Mr. Trump’s executive order signing, said the government will establish rules to promote the use of Canadian steel.

“We need to use more Canadian steel, we need to have measures in place to favour that and that’s exactly the discussion I’m having with the industry,” he said.

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Steel prices in the U.S. have already climbed 16 per cent since Mr. Trump took office in January, according to the government’s Producer Price Index. After Canada, Brazil, Mexico and South Korea are the other major steel exporters to the U.S.

James Knott, who runs a Massachusetts-based company that manufactures wire mesh, said his business is squeezed both by tariffs on the steel it imports from Canada and on price hikes put in place by American mills since the start of the trade war.

“When your costs are 50 per cent higher than anybody else’s, it makes it difficult to compete and gives the Chinese and Europeans a chance to swoop in and take our export business,” he said in an interview earlier this week.

Mr. Knott’s company, Riverdale Mills, makes mesh used in everything from security fencing to lobster traps. He has tried to buy U.S.-made steel but most domestic mills have told the company that they are already at capacity.

“It’s a little backwards to try to protect an inefficient side of the industry while putting all the efficient industries such as ours at risk,” he said.

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In another example of the blowback for Americans, steel accounts for around 10 per cent to 20 per cent of the cost of drilling an oil well in the U.S., oil market researcher Rory Johnston of Commodity Context said in a social-media post. “This further increases the cost of U.S. crude production and shale patch breakeven prices,” he wrote.

The U.S. imports about a quarter of its steel and more than half of its aluminum, and has only four domestic primary smelters of the latter metal. This means many companies have no choice but to continue importing the metals, paying the tariffs and passing the cost along to consumers.

White House press secretary Karoline Leavitt brushed off concerns that the levies are creating uncertainty for U.S. businesses.

“You also have U.S. business leaders begging to meet with this President and begging to come to the White House to talk to him because they know he is a negotiator in chief,” she said at a briefing Tuesday.

The metals tariffs rely on Section 232 of the Trade Expansion Act of 1962, which allows the President to enact tariffs on goods that “threaten to impair the national security.” Mr. Trump, however, has made clear that his goal is to shelter U.S. companies from foreign competition.

Announcing the higher steel tariff on Friday, the President said he hoped it would be so expensive that people would stop importing the metal.

“Nobody is going to get around that,” he said. “At 25 per cent, they can sort of get over that fence. At 50 per cent, they can no longer get over the fence.”

- With a file from Steven Chase