As Trump Raises Tariffs to 50% on Canada, This Policy Is Creating Chaos, Not Balance

President Donald Trump’s decision to double tariffs on Canadian steel and aluminum in retaliation for Ontario’s electricity tariff is another chapter in his administration’s ongoing trade battle aimed at balancing America’s trade deficits and pushing his “America First” agenda. While this move signals a firm stance on holding trading partners accountable, it also raises the question of whether tariffs should remain the go-to tool for achieving fair trade or if a more stable, long-term approach is required.

The 50% tariffs on steel and aluminum, effective Wednesday, follow Ontario’s imposition of a 25% tariff on electricity sent to the United States, which primarily impacts states like Minnesota, New York, and Michigan.

Ontario’s Premier Doug Ford responded by warning that he is prepared to cut off electricity exports entirely if the U.S. increases more pressure. “I will not hesitate to increase this charge. If the U.S. escalates, I will not hesitate to shut off the electricity completely,” Ford said at a news conference in Toronto.

In retaliation, Trump has vowed to ramp up pressure not only on steel and aluminum but also on Canadian automobiles and dairy imports if Canada does not make concessions. His remarks on Truth Social about making Canada the 51st state have, predictably, drawn mixed reactions but underline the larger narrative he’s been pushing, protect American industries by any means necessary.

He wrote on Truth Social that “…Can you imagine Canada stooping so low as to use electricity, that so affects the life of innocent people, as a bargaining chip and threat? They will pay a financial price for this so big that it will be read about in history books for many years to come!”

New York and Ontario are part of a shared electricity grid, known as the Eastern Interconnection. This grid links much of the eastern U.S. and parts of Canada, including Ontario. Ontario supplies electricity to several U.S. states, including New York, Michigan, and Minnesota. Power is transmitted through interties, allowing electricity to flow across the border. Ontario’s tariff on electricity exports affects these regions that rely on this cross-border energy exchange.

This is not the first instance of Trump using tariffs as a negotiating tool. His trade war with China saw the imposition of billions in tariffs on Chinese goods, which were aimed at addressing the unfair trade practices and intellectual property theft that had long put U.S. companies at a disadvantage. Similarly, he targeted Mexico and Canada with steel and aluminum tariffs during negotiations for the new USMCA trade deal. While the U.S. has indeed seen some progress in certain sectors, tariffs cannot be the only answer to trade imbalances.

The critical challenge moving forward is ensuring that tariffs are used judiciously, not as a daily weapon of economic warfare, but as part of a long-term, firm approach based on pre-decided terms and aimed at balancing trade relationships on a 1-to-1 basis. This could mean retaliatory tariffs only when a country’s actions are overtly unfair or damaging to U.S. industries. Allies like Canada and the European Union, whose interests align with the U.S. in many global matters, should not be treated the same way as economic adversaries like China. The key to trade policy moving forward should be consistency, clarity, and sustainable solutions, not frequent tariffs that create market uncertainty.

The broader market response to these ongoing tariffs has been a drop in stock market indices and increasing concerns about trade-related volatility. Uncertainty is bad for businesses, for consumers, and for investors who rely on stable economic conditions to make informed decisions. No one can deny the importance of addressing unfair trade practices, but it’s necessary that trade policies be designed to build trust and foster cooperative relationships, rather than to force concessions through the continual threat of tariffs.

The way markets are reacting to these developments, it is clear that the U.S. needs a more steady and predictable trade policy—one that holds allies accountable without creating unnecessary economic chaos. The goal should be to strengthen America’s position globally while ensuring that the trade agreements made today will be fair and steady.