Markets swing as Canada braces for new wave of U.S. tariffs

By Canadian Press on March 31, 2025.

WASHINGTON — Markets were rattled Monday by confusion over how U.S. President Donald Trump intends to pursue his global tariff agenda this week — and how it will hit Canada.

Trump has said Wednesday will be “Liberation Day” — the day when he intends to impose “reciprocal” tariffs by increasing U.S. duties to match the tax rates that other countries charge on imports.

It’s not at all clear what that will mean for countries that trade with the United States. On Sunday, Trump suggested there could be lower levies days after the Wednesday deadline.

“The tariffs will be far more generous than those countries were to us, meaning they will be kinder than those countries were to the United States of America over the decades,” Trump said on Air Force 1.

The tariff uncertainty caused market swings around the world Monday, with the S&P 500 down 0.6 per cent and the Nasdaq composite down 1.6 per cent.

Reports in the Wall Street Journal said Trump’s team has not decided whether to go ahead with individualized tariff rates or to revert to the president’s campaign promise of a blanket import tariff of up to 20 per cent.

Canadian officials have been connecting with members of Trump’s team to gain insight into how those duties will roll out. Ontario Premier Doug Ford spoke with U.S. Commerce Secretary Howard Lutnick last week but said he was not given any details.

“I think he has an idea, or maybe he doesn’t. That’s even scarier if he doesn’t,” Ford said last Thursday.

Reciprocal tariffs aren’t the only ones set to launch this week. Thursday will bring Trump’s 25 per cent levies on automobiles and parts — which may include some sort of carve-out for cars made with American parts under the Canada-U.S.-Mexico Agreement on trade.

Earlier in March, Trump imposed 25 per cent tariffs on all steel and aluminum imports, including product from Canada.

It’s also not clear whether economy-wide tariffs, which Trump has linked to the flow of fentanyl, will hit Canada and Mexico again this week. Earlier this month, Trump hit Canada and Mexico with 25 per cent across-the-board duties, with a lower 10 per cent levy on Canadian energy, only to partially pause the tariffs a few days later.

Trump said at the time the pause would last until April 2. The White House not provided an updated timeline.

Democrat Sen. Tim Kaine said Friday he would force a vote on Trump’s use of the International Economic Emergency Powers Act, also called IEEPA, to declare an emergency at the northern border in order to hit Canada with tariffs.

In an opinion piece published in the Washington Post, Kaine wrote that “the president is using the fake emergency as a smoke screen to collect tariff revenue that he can use to fund a massive tax cut for the uber-rich.”

The national security statute includes a provision allowing any senator to force a vote to block emergency powers. While it might not be able to stop Trump’s declaration of an emergency at the northern border, it would force Republican senators to publicly note their opinion.

This week’s tariff speculation comes after Trump and Prime Minister Mark Carney had their first phone conversation — which seemed to offer hope for setting the bilateral relationship on a less adversarial path.

Trump spent months repeatedly saying Canada should become a U.S. state and referring to former prime minister Justin Trudeau as a “governor.”

Trump described the Friday call with Carney as “very good” and said he thinks “things are going to work out very well between Canada and the United States.” Carney said the two leaders agreed to begin negotiations on a new economic and security relationship immediately after the federal election on April 28.

But when asked about the impact his tariffs are having on the American economy, Trump on Sunday repeated his complaints against Canada.

“We don’t need energy from Canada. We don’t need lumber from Canada. We don’t need anything from Canada. We don’t need cars from Canada, as an example,” Trump said. “So I think we’re going to have, what I call it, the golden age of America.”

— With files from the Associated Press

This report by The Canadian Press was first published March 31, 2025.

Kelly Geraldine Malone, The Canadian Press