US President Donald Trump has said he will double the tariffs he previously announced on Canadian steel and aluminium imports into the US, taking the levies to 50% in total.
In the latest twist in a deepening trade war, Trump said it was in retaliation for a 25% surcharge Ontario announced on electricity it sends to northern US states on Monday.
Trump said if tariffs, including those on agricultural products were not dropped, he would hike taxes on the car industry, "which will, essentially, permanently shut down the automobile manufacturing business in Canada".
Ontario premier Doug Ford said: "Until the threat of tariffs is gone for good, we won't back down."
Ford added in a post on X that Trump had "launched an unprovoked trade and tariff war with America's closest friend and ally".
He has previously said he will "not hesitate to shut off electricity completely" if the US "escalates".
Tariffs are taxes charged on goods imported from other countries.
The companies that bring the foreign goods into the country pay the tax to the government.
But firms may pass then on some or all of the cost of levies to customers.
Writing on his social media platform Truth Social, Trump said his tariffs would go into effect on Wednesday morning, and that he would declare "a national emergency on electricity" in those states.
He also said Canada relied on the US for "military protection", and reiterated that he wanted the country to become the 51st US state.
He add that it "would make all tariffs, and everything else, totally disappear" if Canada were to join the US as a state.
Canadian Prime Minister-designate Mark Carney posted on X, "President Trump's latest tariffs are an attack on Canadian workers, families, and businesses. My government will ensure our response has maximum impact in the US and minimal impact here in Canada, while supporting the workers impacted."
"My government will keep our tariffs on until the Americans show us respect and make credible, reliable commitments to free and fair trade."
The announcement comes during a turbulent time for markets.
The S&P 500 index of the largest firms listed in the US fell a further 0.5% on Tuesday after dropping 2.7% on Monday, which was its biggest one-day drop since December.
The UK's FTSE 100 share index, which had edged lower earlier on Tuesday, fell further following Trump's latest comments and closed down more than 1%. The French Cac 40 index and German Dax followed a similar pattern.
Monday's stock market sell-off had begun after Trump said the economy was in a "transition" when asked about whether the US was heading for a recession.
Investors have been concerned about the economic effects of Trump's trade policies, which it is feared could push up inflation in the US and beyond.
Even before Tuesday's comments, Trump's tariffs had already been causing concern for US businesses.
On Monday, Jason Goldstein, founder of Icarus Brewing, a small beer-maker in New Jersey that employs 50 people, told the BBC that previous tariff announcements had prompted a slew of emails from his suppliers.
They have been warning that price increases for everything from grain and aluminium cans are likely to be coming.
Mr Goldstein has stockpiled an extra month's supply of cans and held off on new purchases as a result of the uncertainty and rapidly changing situation.
"It's definitely a worrying time for us," he said.
"Never before in my life have I had to read so much news, watch so much news to know, here's what my industry's going to look like tomorrow."
Additional reporting by Natalie Sherman
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The move is in retaliation to Trump's tariff threats on Canada, and is expected to raise energy costs for 1.5 million US homes.
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