Trump’s New Tariffs on Canadian Steel and Aluminum Trigger Global Markets Crash: Bitcoin Plunges 4%, Nasdaq and S&P 500 Tumble as Trade War Escalates!

President Donald Trump’s new tariffs on Canadian steel and aluminum represent a fresh escalation in trade tensions that has caused global markets to react strongly. Beginning March 12, Trump’s new tariffs will increase existing trade duties between neighboring countries by 50%. The Trump administration has stated that additional tariffs will be imposed on Canadian automobiles if Canada does not eliminate its high dairy tariffs, which currently range between 250% and 390%.

The announcement followed Ontario’s decision to impose a 25% surcharge on electricity exports to the U.S., which Trump described as an “abusive threat.” Ontario Premier Doug Ford, alongside U.S. Commerce Secretary Howard Lutnick, disclosed that they would suspend the surcharge following Trump’s announcement yet confirmed that steel and aluminum tariffs will proceed as planned. The continuing trade conflict has shaken the financial markets, resulting in Bitcoin falling by more than 4%, along with significant losses across major stock indices.

Tariff War Intensifies Between U.S. and Canada

President Trump’s aggressive trade strategy now includes newly imposed tariffs as part of his efforts to renegotiate economic partnerships with major U.S. trading partners. Trump maintains that Canada’s protectionist dairy tariffs create unfair competition against American farmers. The U.S. threatens to impose additional penalties, including raising automobile tariffs by April 2 if current tariffs stay in place, thereby risking severe damage to Canada’s automotive industry.

Trump intensified the conflict by proposing that Canada should become the United States’ “cherished Fifty-First State” to resolve these trade disputes. Canadian officials responded with controversy and strong reactions to the likely rhetorical statement. The potential for additional economic sanctions creates uncertainty about future trade relations and economic stability for businesses on both sides of the border.

Market Turbulence and Investor Reaction

Global financial markets experienced a significant reaction following Trump’s new tariffs. Bitcoin experienced a 4.2% decrease that pushed its value below $80,000. According to the BTC/USD live chart, BTC’s price stands at around $81.794 K as of March 12, 2025. 

Chart 1- BTC/USD Live Price, published on TradingView, March 12, 2025.

This Monday, the Nasdaq experienced its most severe decline since September 2022, with a 4% drop. The 30-stock Dow lost nearly 900 points. Citigroup downgraded its United States stock rating this week to neutral from overweight because of what it described as “a pause in U.S. exceptionalism.

Likewise, President Donald Trump’s new tariffs created turbulence throughout Tuesday’s trading session as the S&P 500 tumbled while traders struggled to understand the constant changes. The benchmark index stands on the edge of a correction triggered by trade policy uncertainty because a correction represents a 10% drop from its peak.

Similarly, the stock market benchmark S&P 500 dropped by 0.76% to finish at 5,572.07. The index reached its lowest point during Tuesday’s session, falling 10% beneath its highest recorded closing value.

Chart 2- S&P 500 Index, 1-day, published on CNBC.com, March 12, 2025.

Market volatility increased following Trump’s announcement that the administration would not continue Bitcoin acquisitions for the National Strategic Reserve. Due to these developments, investors felt increased anxiety, specifically within the cryptocurrency market. Market analysts expressed concerns that ongoing trade disputes would drive financial markets toward a correction stage while recession concerns overshadow Wall Street. The financial impact of trade policies remains a major concern among investors as they analyze future market movements.

U.S.- Canada Trade Talks and Future Prospects

The intense discourse between parties still allows room for reducing tensions through diplomatic discussions. The White House has organized a meeting for Thursday where U.S. and Canadian officials will discuss trade policies to find common solutions. Experts hope this meeting stops the worsening economic relations between the United States and Canada.

Trump’s unpredictable policy changes and aggressive negotiation strategies create uncertainty regarding future outcomes. Business and trade analysts warn that if an agreement isn’t reached, it could trigger increased tariffs on Canadian automobiles, which would result in significant job losses and prolong the trade conflict, thus damaging economic relationships in North America.

The Road Ahead: Economic Consequences and Political Implications

The continuous trade dispute between the U.S. and Canada demonstrates broader concerns about Trump’s unpredictable economic policy direction. By acting as a defender of U.S. businesses through tariffs, he might face unintended consequences. These trade barriers could harm both countries’ economies by creating supply chain issues and raising consumer prices while causing diplomatic tensions to escalate.

The volatile state of global markets drives investors to closely monitor forthcoming economic data while paying special attention to February’s Consumer Price Index. The information will reveal details about inflation patterns and possible reactions from the Federal Reserve. As it is clear, North America may confront unprecedented risks to economic stability because of the financial impact of trade policies and market fluctuations.