Well the tariff war continues to take worse turns for Canada. USD/CAD has jumped about 60 pips on the latest from Trump, which promises an additional 25% tariff on Canadian steel and aluminum on top of the 25% already scheduled for tomorrow.

Here is the tweet:

Based on Ontario, Canada, placing a 25% Tariff on “Electricity” coming into the United States, I have instructed my Secretary of Commerce to ad an ADDITIONAL 25% Tariff, to 50%, on all STEEL and ALUMINUM COMING INTO THE UNITED STATES FROM CANADA, ONE OF THE HIGHEST TARIFFING NATIONS ANYWHERE IN THE WORLD. This will go into effect TOMORROW MORNING, March 12th. Also, Canada must immediately drop their Anti-American Farmer Tariff of 250% to 390% on various U.S. dairy products, which has long been considered outrageous. I will shortly be declaring a National Emergency on Electricity within the threatened area. This will allow the U.S to quickly do what has to be done to alleviate this abusive threat from Canada. If other egregious, long time Tariffs are not likewise dropped by Canada, I will substantially increase, on April 2nd, the Tariffs on Cars coming into the U.S. which will, essentially, permanently shut down the automobile manufacturing business in Canada. Those cars can easily be made in the USA! Also, Canada pays very little for National Security, relying on the United States for military protection. We are subsidizing Canada to the tune of more than 200 Billion Dollars a year. WHY??? This cannot continue. The only thing that makes sense is for Canada to become our cherished Fifty First State. This would make all Tariffs, and everything else, totally disappear. Canadians taxes will be very substantially reduced, they will be more secure, militarily and otherwise, than ever before, there would no longer be a Northern Border problem, and the greatest and most powerful nation in the World will be bigger, better and stronger than ever — And Canada will be a big part of that. The artificial line of separation drawn many years ago will finally disappear, and we will have the safest and most beautiful Nation anywhere in the World — And your brilliant anthem, “O Canada,” will continue to play, but now representing a GREAT and POWERFUL STATE within the greatest Nation that the World has ever seen!

FWIW, there are almost no tariffs between Canada and the US under the USMCA but the facts don’t matter in 2025. One exception is farm products, which the US subsidizes at extreme rates and were negotiated by Trump in the USMCA.

This announcement from Trump is hurting broad sentiment as well. It shows that he has no problems wrecking the market in a tariff war and isn’t having second thoughts.

Canadian steel imports can be replaced, though not by Mexico which is also subject to 25% tariffs. Aluminum is a big problem though. It’s extremely energy-intensive and half of US imports come from Canada.

This article was written by Adam Button at www.forexlive.com.