President Trump’s tariff policies sparked another day of political and financial-market turmoil Tuesday — along with new recognition that he really may be serious about trying to make Canada part of the United States.
The major U.S. stock indices ended the day with significant declines, deepening the descent they have suffered amid uncertainly over tariffs.
Over the past month, the Dow Jones Industrial Average has declined by 6.3 percent, the broader-based S&P 500 by 7.6 percent and the tech-heavy Nasdaq by 10.9 percent.
The proximate cause for Tuesday’s decline was renewed tension with Canada.
Trump initially said he would double tariffs on Canadian steel and aluminum imports from a planned 25 percent to 50 percent. He cast this as payback for Ontario Premier Doug Ford’s decision to impose a 25 percent surcharge on the sale of electricity to U.S. states, primarily New York, Michigan and Minnesota.
Later in the day, Ford announced that he would not follow through on that threat following the offering of an “olive branch” from Washington — a meeting with Commerce Secretary Howard Lutnick, scheduled for Thursday, to discuss trading arrangements.
Trump, uncharacteristically, also sought to deescalate the situation, calling Ford a “gentleman” in remarks to reporters in the White House driveway, and suggesting he would drop his 50 percent threat.
This was duly confirmed by a White House spokesperson, though the 25 percent tariffs are still set to go into effect.
The ramping down of the trade tensions with Ontario momentarily mollified the markets before they sank again toward the end of the trading day.
Alongside this, however, the wider world is figuring out how to come to terms with the American president’s apparent desire for Canada to abandon its independence.
The notion that Canada — which eventually became fully sovereign in 1982 — would somehow willingly incorporate itself into the United States was widely treated as a joke when Trump first raised it.
But he has continued to harp on the topic to the point where it seems increasingly clear that he is at least somewhat serious.
“The only thing that makes sense is for Canada to become our cherished Fifty First State,” he wrote on social media on Tuesday morning. “This would make all Tariffs, and everything else, totally disappear.”
He added, in reference to the northern border, “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.”
Later, during his White House driveway remarks alongside Elon Musk, Trump reiterated his proposal, saying that Canada “would be great as our cherished 51st state. You wouldn’t have to worry about borders, you wouldn’t have to worry about anything.”
If Trump is hoping to persuade the people to the north to relinquish their independence, he appears to have a Mount Logan-sized mountain to climb. A poll in January, when Trump began floating the idea, found 90 percent of Canadians opposed.
That poll, however, also showed a disinclination to believe Trump could be serious. Fifty-two percent of Canadians then believed that the American president was “trolling, seeking attention” compared to 32 percent who took him seriously.
Since, some people, including outgoing Canadian Prime Minister Justin Trudeau, appear to be taking the president more seriously.
At a news conference last week, Trudeau contended, regarding Trump: “What he wants to see is a total collapse of the Canadian economy because that will make it easier to annex us.”
The prime minister added: “That is never going to happen. We will never be the 51st state.”
Trudeau and his Liberal Party have already been unintended beneficiaries of Trump’s ire.
The Liberals had been trailing the center-right Conservative Party by a huge margin. A NANOS poll in mid-January gave the Conservatives a 27-point lead.
The polling deficit has now been all but eradicated. A new poll from the same organization, released Tuesday, showed the Liberals just 1 point adrift.
Mark Carney, a former central banker, won the race to succeed Trudeau on Sunday and could be sworn in within days as the new prime minister.
Carney, hardly a firebrand by nature, has nonetheless sounded a defiant tone in response to Trump’s tariff moves — and in rebuffing any suggestion that Canada might relinquish its independence.
“America is not Canada, and Canada never, ever will be part of America in any way, shape or form,” he said in his victory speech on Sunday.
Regarding tariffs, Carney threw out a hockey metaphor: “We didn’t ask for this fight, but Canadians are always ready when someone else drops the gloves. So the Americans, they should make no mistake in trade, as in hockey, Canada will win.”
Perhaps the notion of incorporating Canada into the U.S. will remain a sideshow. Certainly, it seems less salient to the financial markets — and the roughly 160 million Americans who own some stocks — than the broader picture of tariffs and inflation.
But Trump’s focus on the topic is fostering its own resistance.
The Memo is a reported column by Niall Stanage.
