Washington. President Donald Trump announced Tuesday that he will double tariffs on Canadian steel and aluminum from 25 percent to 50 percent, escalating tensions with the United States’ northern neighbor.

Trump said the increase, set to take effect Wednesday, is in response to Ontario’s decision to raise electricity prices for U.S. buyers.

"I have instructed my Secretary of Commerce to add an ADDITIONAL 25 percent tariff, to 50 percent, on all STEEL and ALUMINUM COMING INTO THE UNITED STATES FROM CANADA, ONE OF THE HIGHEST TARIFFING NATIONS ANYWHERE IN THE WORLD," Trump wrote on Truth Social.

The US stock market fell following his announcement.

The tariff hike comes amid mounting concerns that Trump’s trade policies could push the US economy into recession. Following a steep market selloff in recent weeks, the president is under pressure to outline an economic growth strategy instead of imposing broad-based tariffs that critics argue could stifle investment.

Trump was set to address the Business Roundtable, a group of corporate CEOs, on Tuesday afternoon. During his 2024 campaign, he courted their support by promising lower corporate tax rates for domestic manufacturers. However, his expansive tariff agenda—targeting Canada, Mexico, China, Europe, and sectors including steel, aluminum, pharmaceuticals, copper, lumber, and semiconductors—now threatens to act as a significant tax hike.

Former Treasury Secretary Larry Summers, now a Harvard economist, put the odds of a recession at 50-50.

"All the emphasis on tariffs and all the ambiguity and uncertainty has both chilled demand and caused prices to go up," Summers posted on X. "We are getting the worst of both worlds—concerns about inflation and an economic downturn, plus more uncertainty that slows everything."

Goldman Sachs revised its 2025 US growth forecast down to 1.7 percent from 2.2 percent and raised its recession probability to 20 percent, noting that the White House could still scale back policies if risks worsen.

Trump’s Reassurances Fail to Calm Markets

Trump has framed the tariffs as a short-term "transition" period that will ultimately bring manufacturing jobs back to the US However, in an interview Sunday on Fox News’ Sunday Morning Futures, he did not rule out the possibility of a downturn.

"I hate to predict things like that," Trump said. "There is a period of transition because what we're doing is very big. We're bringing wealth back to America. That’s a big thing. But I think it should be great for us."

Investors remained unconvinced. The S&P 500 plunged 2.7 percent on Monday, erasing post-election gains, and continued its decline in Tuesday morning trading.

After markets closed Monday, the White House sought to highlight the tariffs’ benefits, noting that companies such as Honda, Volkswagen, and Volvo were considering new investments in US factories.

A White House statement credited Trump's policies—including tariffs, deregulation, and increased energy production—for spurring corporate pledges to "create thousands of new jobs." However, with the US economy already adding 2.2 million jobs last year, the broader impact remains uncertain.