U.S. tariffs on Canadian metals reignite trade tensions, threatening jobs and global supply chains. Canada readies countermeasures amid economic fallout.
U.S. Tariff Surge Reopens Trade Rift
On June 4, 2025, the Trump administration escalated trade tensions by doubling tariffs on imported steel and aluminum to 50%, targeting major partners including Canada and Mexico. The move, part of a broader strategy to pressure allies ahead of forthcoming “Liberation Day” tariffs, excludes only the United Kingdom, which secured a preliminary trade agreement.
Canadian Industries Brace for Economic Shock
Canada, the largest aluminum exporter to the U.S., faces significant economic repercussions. Companies like Rio Tinto and Marid Industries anticipate reduced sales and potential layoffs, with some considering diversifying exports to Europe or tightening operations due to diminished access to the U.S. market. Unifor, Canada’s largest private-sector union, warns of broader job losses, particularly in the auto and aerospace sectors.
Ottawa Considers Retaliation Amid Diplomatic Efforts
Prime Minister Mark Carney confirmed ongoing negotiations with the U.S. but is also preparing countermeasures if talks fail. Ontario Premier Doug Ford advocates for an additional 25% tariff in response and suggests taxing electricity exports to the U.S., affecting 1.5 million American customers.
Economic Indicators Signal Strain
The Bank of Canada maintained its key interest rate at 2.75% on June 4, citing a softened economy and rising inflation. Second-quarter growth is expected to weaken significantly, following a stronger-than-expected 2.2% increase in the first quarter, driven by exports and inventory build-up to avoid U.S. tariffs. Inflation accelerated to 3.15% in April, raising concerns amid trade disruptions.
Global Repercussions and Outlook
The Organization for Economic Cooperation and Development (OECD) forecasts that the tariff hikes will drag down growth in Canada, Mexico, and the United States while driving up inflation. The OECD warns that a broader trade war could further sap global growth, weighing on business investment and boosting inflation, leaving central banks with limited options.
As the U.S. and Canada navigate this renewed trade conflict, the potential for a prolonged economic standoff looms, with significant implications for industries, workers, and consumers on both sides of the border.
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