US President Donald Trump has made global ripples with his announcement of an increase in tariffs on Canadian steel and aluminum. His announcement has notably caused unrest in Bitcoin and other market values, referenced in a post made by the President himself on Trumps Truth Social. According to this social media update, the tariffs, which will see a leap from 25% to 50%, will be implemented from March 12.
Underlying Causes
The increase in tariffs can be traced back to a 25% tariff imposed by the Ontario government on US electricity. This significant hike has given rise to a bitter exchange of words and policies between the two neighboring countries. President Trump, however, did not stop at his tirade against the steel and aluminum tariffs but extended his criticism to the longstanding tariffs on U.S. dairy products imposed by Canada.
Impacts of High Dairy Tariffs
Canada’s tariffs on U.S. dairy products range between a whopping 250% to 390%. Trump has labelled these tariffs as ‘outrageous’ and not conducive to bilateral trade relations between the two nations. The President did not shy away from threatening to declare a national emergency on electricity to counter what he perceives as an ‘abusive threat’ from Canada.
The Threat of Increased Automobile Tariffs
However, President Trump did not limit his criticism and threats to dairy and energy products alone. He issued a stern warning that if Canada refuses to eliminate its “egregious tariffs”, the U.S. will be justified in drastically increasing tariffs on Canadian automobile imports. He has slated the implementation of this new trade policy change for April 2. According to him, this change would mark an end to the flourishing automobile manufacturing industry in Canada.
The 51st State Proposal
In what was perhaps the most surprising turn of the statement, Trump went on record to suggest that the optimal resolution to tariff disputes would be for Canada to join the United States as its “cherished Fifty-First State”. Such a move would, as per his argument, dissolve all trade conflicts and tariff barriers between the two nations.
Market Reactions
The President’s shocking announcement and the resulting trade instability had immediate effects on the global market. The value of Bitcoin fell by 4.2%, a blow which caused its price to fall below the $80,000 mark. The Dow Jones also suffered from the trade announcement, with a sharp drop of nearly 600 points. The trade tensions, coupled with the Trump administration’s declaration of no new Bitcoin purchases being planned for the national strategic reserve, have put investors on high alert.
Recent Developments
Even though it dipped below the desired mark, Bitcoin has since rebounded and is currently valued at above $81,000. This tariff dispute follows Trump’s previous tariffs imposed on Canadian and Mexican goods. Both Canada and Mexico have made their discontent clear, stating that these moves violate trade agreements in place.
