On March 11, 2025, President Donald Trump shook financial markets by unveiling plans to raise tariffs on Canadian steel and aluminum from 25% to 50%. The decision, shared via a Truth Social post, comes as a response to Canada’s 25% tariff on American electricity exports from Ontario. This move has rippled through global markets, with Bitcoin (BTC) sliding more than 4% and briefly dipping below $80,000.
Escalating Trade Tensions with Canada
Trump’s announcement didn’t stop at steel and aluminum. He also demanded that Canada eliminate its steep dairy tariffs—ranging between 250% and 390%—which he called “outrageous.” The new tariff rates are set to take effect on March 12, 2025. Additionally, Trump threatened further action, warning that tariffs on Canadian automobiles could skyrocket by April 2 if Canada fails to address what he deems “egregious” trade barriers.
In a bold statement, Trump suggested that Canada could avoid these economic pressures by becoming the “Fifty-First State” of the U.S., eliminating all tariffs and trade disputes entirely. He also hinted at declaring a national emergency over electricity, accusing Canada of leveraging an “abusive threat” against U.S. interests.
Market Fallout: Bitcoin and Stocks Tumble
The tariff news rattled investors. Bitcoin, a leading cryptocurrency, dropped 4.2% following the announcement, falling below the $80,000 mark before recovering slightly to $81,100. Traditional markets also felt the heat, with the Dow Jones Industrial Average shedding nearly 600 points. The sell-off was compounded by the Trump administration’s clarification that it has no immediate plans to bolster the national strategic reserve with Bitcoin purchases, dampening crypto enthusiasts’ hopes.
Broader Implications of U.S.-Canada Trade Spat
This tariff escalation builds on earlier trade measures targeting Canada and Mexico. Both nations have resisted, arguing that such actions violate existing trade agreements. Trump’s latest threats, particularly regarding Canadian auto manufacturing, could disrupt an industry critical to Canada’s economy. He warned that heightened car tariffs might “effectively dismantle” Canada’s automotive sector.
Why Bitcoin Reacted
Cryptocurrencies like Bitcoin often respond to macroeconomic shifts, and this tariff dispute is no exception. Investors may view rising trade tensions as a signal of economic uncertainty, prompting a flight from riskier assets like BTC to safer havens. The absence of new Bitcoin acquisitions for the U.S. strategic reserve further eroded confidence among crypto traders.
Looking Ahead
As the March 12 tariff deadline approaches, markets will closely watch Canada’s response. Will Canada concede to Trump’s demands, or will this spat deepen? For now, Bitcoin and other assets remain vulnerable to the fallout of this high-stakes trade conflict.