National Emergency Declared: Fallout from US-Canada Electricity Trade Dispute

President Trump declares a national emergency over Canadian electricity exports, threatening 50% tariffs on Canadian steel and aluminum and suggesting Canada might consider becoming the 51st U.S. state.

Key Takeaways

Trump raised tariffs on Canadian steel and aluminum to 50% in retaliation for Ontario’s 25% tariff on electricity exports to the U.S.
New tariffs will take effect March 12th, with additional “reciprocal tariffs” threatened for April 2nd if Canada doesn’t drop its duties on U.S. goods.
Trump threatened to impose tariffs on Canadian vehicles that could “permanently shut down” Canada’s auto manufacturing industry.
The Canadian dollar and U.S. stocks reacted negatively, with the Dow Jones falling over 500 points following Trump’s announcement.
Trump suggested Canada become the 51st U.S. state, claiming it would eliminate tariffs and improve security and economic conditions.

Trade War Escalates Over Electricity

President Trump has ordered a 25% increase in tariffs on Canadian steel and aluminum imports, bringing the total to 50%, in direct retaliation for Ontario’s decision to place a 25% tariff on electricity exported to the United States. The aggressive move marks a significant escalation in trade tensions between the longtime allies. The new tariffs are set to take effect on March 12th, with Trump signaling that additional measures could follow if Canada does not yield to U.S. demands on other trade issues.

In his announcement, Trump specifically cited Ontario’s electricity tariff as the catalyst for his decision, calling Canada “ONE OF THE HIGHEST TARIFFING NATIONS ANYWHERE IN THE WORLD.” The President also demanded that Canada drop what he characterized as high tariffs on U.S. dairy products, highlighting his administration’s focus on addressing perceived trade imbalances across multiple sectors. Market reaction was swift, with the Canadian dollar falling sharply and U.S. stock markets tumbling.

Trump just announced CANADA WITH A 50% TARIFF on STEEL & ALUMINUM after Ontario’s 25% ELECTRICITY TARIFF on the U.S.

He warns of a National Emergency and hints at making CANADA the 51ST STATE

Auto tariffs could be next on April 2nd

He is not playing around folks pic.twitter.com/iF3EokbyFD

— 🌸 Digi Gal (@DigitalGal_) March 11, 2025

Threat to Canada’s Auto Industry

Taking his trade offensive further, Trump threatened to impose additional tariffs on Canadian auto imports that could potentially devastate Canada’s manufacturing sector. “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,” Trump declared.

Ontario Premier Doug Ford responded defiantly, describing Trump’s actions as an “unprovoked attack” and vowing to maintain the electricity export tax despite the escalating consequences. Canadian Prime Minister Justin Trudeau accused Trump of attempting to weaken Canada economically as part of a broader strategy to pressure the nation. Meanwhile, the Dow Jones Industrial Average fell over 500 points as investors reacted to the potential impact on North American supply chains and trade relationships.

The ’51st State’ Proposal

In a remarkable suggestion that further heightened tensions, Trump proposed that Canada consider becoming the 51st U.S. state. “The only thing that makes sense is for Canada to become our cherished Fifty First State,” Trump stated, arguing that such a move would eliminate tariffs and improve security and economic conditions for Canada. He claimed that Canada relies heavily on U.S. military protection and would benefit financially from joining the union.

The proposal met with immediate and forceful rejection from Canadian leaders. Incoming Prime Minister Mark Carney declared, “America is not Canada, and Canada never, ever, will be part of America in any way, shape or form.” Trump has also claimed the tariffs are partially aimed at stopping fentanyl trafficking, though he acknowledged the potential economic impacts of his trade policies. April 2 has been set as the deadline for imposing further “reciprocal tariffs” on countries with duties on U.S. goods.