By Brian Swint and Al Root

President Donald Trump said on Tuesday that he plans to double the tax rate on imports of Canadian steel and aluminum after Ontario retaliated against earlier tariffs with higher levies on electricity sent to the U.S.

The effects are reaching unexpected areas of the stock market.

"I have instructed my Secretary of Commerce to add an ADDITIONAL 25% Tariff, to 50%, on all STEEL and ALUMINUM COMING INTO THE UNITED STATES FROM CANADA, ONE OF THE HIGHEST TARIFFING NATIONS ANYWHERE IN THE WORLD, " Trump said in a post on his Truth Social site. "This will go into effect TOMORROW MORNING."

On Monday, Ontario said it would levy a 25% surcharge on electricity to the U.S., which mainly goes to Michigan, Minnesota, and New York. Trump said in his social-media post that he would declare an electricity emergency in those areas.

Stocks of producers of steel and aluminum got an immediate lift, while the broader market fell. Alcoa stock was up 2.7% in midday trading. Shares of steel makers Cleveland-Cliffs, U.S. Steel, Nucor, and Steel Dynamics were up about 2% on average, while the S&P 500 and Dow Jones Industrial Average were down 1.1% and 1.6%, respectively.

Shares of auto makers fell because Trump also promised higher levies on cars assembled in Canada and sold in the U.S., effective April 2.

Toyota shares were down 2.5% in midday trading. "Toyota supply could get even higher," wrote Guggenheim analyst Ronald Jewsikow in a Tuesday report, saying the company makes the RAV4, the Lexus NX, and RX in Ontario.

Shares of alcohol makers and distributors Brown-Forman and Constellation Brands were off 5.7% and 3.2%, respectively. They could face additional tariffs on their exports, depending on whether, and how, Canada retaliates.

The increased tariffs on Canadian commodities come the day before 25% steel and aluminum import tariffs are set to take effect. Those tariffs apply to all imports regardless of their country of origin.

The planned levies on steel and aluminum have moved commodity prices. Since Trump's early February announcement, benchmark steel prices have jumped from roughly $740 a ton to $930 a ton. The impact on aluminum prices has been less dramatic, but prices are up about $100 per metric ton to about $2,700.

Price increases haven't translated to significant gains for shareholders yet. Through midday trading Tuesday, Alcoa stock was down about 12% since Trump proposed the tariffs. The company makes aluminum in both the U.S. and Canada. Shares of Cliffs, U.S. Steel, Nucor, and Steel Dynamics were roughly flat. The S&P 500 was down about 7%.

Investors can never be sure how long tariff-induced higher prices will last. They also expect a post-implementation dip as buying dries up.

Companies typically build inventory to help avoid tariffs. Trump pointed out in an interview that auto makers were rushing to import cars from Canada and Mexico after he gave the industry a one-month reprieve from import tariffs.

The added volatility makes determining the impact difficult. It also gives investors a reason to wait to commit capital until things settle down.

They haven't settled down yet, leaving Canada appearing to bear the brunt of Trump's tariff push so far.

The president also cited Canadian tariffs on dairy products, saying Canada relies too much on the U.S. for defense. Trump also repeated his call for Canada to become the 51st state, an idea that Canada has firmly rejected.

Write to Brian Swint at brian.swint@barrons.com and Al Root at allen.root@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

March 11, 2025 13:31 ET (17:31 GMT)

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