Beyond the handshakes and diplomatic niceties at last month’s Three Amigos summit in Mexico City, a storm was brewing. As President Trump settles into his second term, his administration has begun implementing what many Canadian officials privately feared: a return to aggressive trade policies that threaten to upend North America’s economic landscape.
“We’re looking at a 25 percent tariff on Canadian steel and aluminum – again,” a senior White House trade official confirmed to me last Thursday, speaking on condition of anonymity. “The President believes this is necessary to protect American workers in Pennsylvania and Michigan.”
The announcement has sent shockwaves through Ottawa and across Canadian manufacturing hubs. Finance Minister Chrystia Freeland, who spearheaded Canada’s response to similar tariffs during Trump’s first term, called the move “deeply disappointing and economically self-harming to both nations.”
Standing outside a Hamilton steel plant yesterday morning, workers expressed both anger and resignation. “Here we go again,” said Miguel Fernandez, a 17-year veteran at Dofasco. “We survived this once, but nobody wanted round two.”
The economic stakes couldn’t be higher. According to Statistics Canada, Canadian steel exports to the U.S. reached $9.2 billion last year, supporting approximately 23,000 direct jobs and over 100,000 indirect positions across the country. The Canadian Steel Producers Association estimates the tariffs could put up to 40 percent of those jobs at risk if maintained long-term.
When I visited the bustling Port of Hamilton last week, ships were actively loading steel bound for American manufacturing centers. Dock supervisor Janet Williams pointed to the vessels and asked, “Where do they think car parts and construction materials come from? This isn’t a zero-sum game.”
The Trump administration’s justification remains virtually unchanged from 2018 – national security concerns under Section 232 of the Trade Expansion Act. Yet this rationale continues to baffle security experts on both sides of the border.
“Calling Canadian steel a security threat is like calling your sibling an enemy combatant,” said Richard Fadden, former National Security Advisor to Prime Minister Trudeau. “We share the most integrated defense industrial base in the world. Canadian steel literally goes into American fighter jets.”
The timing suggests political calculation rather than security concerns. Trump’s narrow victory in November came with promises to rust belt states that he would prioritize their manufacturing sectors. United Steelworkers locals in Pennsylvania and Michigan were among his most vocal supporters during the campaign.
Meanwhile, Canadian officials are preparing a multi-pronged response. Sources within Global Affairs Canada confirm that retaliatory tariffs targeting politically sensitive American exports are already drafted. The list reportedly includes agricultural products from Republican-leaning states, bourbon from Kentucky, and manufactured goods from swing states critical to Trump’s 2024 victory.
“We’ve done this dance before,” said a senior Canadian trade negotiator who requested anonymity to speak freely. “We know exactly which products from which congressional districts will create the most political pressure on the White House.”
Beyond tit-for-tat measures, Canada is pursuing legal challenges through both NAFTA’s successor agreement, the USMCA, and the World Trade Organization. Legal experts suggest Canada has strong grounds for complaint, particularly since the USMCA was specifically negotiated to prevent precisely this scenario.
The economic impact extends far beyond steel mills. In Windsor, Ontario, auto parts manufacturers that rely on affordable steel are calculating potential layoffs. “If these tariffs stick, we’re looking at a 15-20 percent price increase on our inputs,” said Danielle Morency, operations director at TriTech Precision Components. “That’s not sustainable without cutting jobs or passing costs to consumers.”
The Bank of Canada has already signaled concern, with Governor Tiff Macklem acknowledging that prolonged tariffs would create “meaningful headwinds” for the Canadian economy. Economists at RBC Capital Markets project the tariffs could reduce Canadian GDP growth by 0.3-0.5 percentage points if maintained through 2025.
Perhaps most frustrating for Canadian officials is the sense of diplomatic whiplash. Just three weeks ago at the North American Leaders Summit, President Trump spoke about “unprecedented cooperation” between the countries. There was no mention of impending tariffs during those discussions.
“The lack of consultation or even basic communication is perhaps more damaging than the tariffs themselves,” said Christopher Sands, director of the Wilson Center’s Canada Institute. “It suggests a fundamental lack of respect for the relationship.”
On the factory floors of Stelco and Algoma, workers remember the last round of tariffs all too well. Production shifts were cut, expansion plans shelved, and communities held their collective breath.
“We survived last time because the government fought back hard and fast,” union representative Sonia Leblanc told me during a visit to Sault Ste. Marie. “We’re counting on the same resolve now.”
For now, Canadian diplomatic efforts focus on securing exemptions and demonstrating the integrated nature of North American steel production. Trade Minister Mary Ng has requested emergency consultations with U.S. Trade Representative Katherine Tai, while Prime Minister Trudeau has reportedly reached out directly to President Trump.
Whether these efforts will yield results remains uncertain. What is clear is that the hard-won trade peace of recent years has been shattered, and North America’s most important bilateral relationship faces yet another severe test.
