President Donald Trump spooked Bitcoin and other markets after announcing a tariff increase on Canadian steel and aluminum from 25% to 50%, citing Ontario’s 25% tariff on U.S. electricity. 

According to Trump’s Truth Social post, the new tariffs will take effect on March 12. Trump also called on Canada to remove up to 390% dairy tariffs and warned of higher tariffs on Canadian cars by April 2.

In his statement, President Trump criticized Canada’s longstanding tariffs on U.S. dairy products, which range from 250% to 390%, labeling them as “outrageous.” He further threatened to declare a national emergency concerning electricity to counter what he described as an “abusive threat” from Canada. 

‘Egregious’ tariffs

Additionally, Trump warned that if Canada does not eliminate other “egregious” tariffs, the U.S. will substantially increase tariffs on Canadian automobile imports starting April 2—a move he claims would effectively “shut down the automobile manufacturing business in Canada.”

Trump also said that “the only thing that makes sense is for Canada to become our cherished Fifty-First State. This would make all tariffs, and everything else, totally disappear.”

Markets reacted to the announcement. Bitcoin (BTC) fell 4.2%, dipping below $80,000 while The Dow Jones dropped nearly 600 points. Investors responded to both the trade tensions and the administration’s statement that no new Bitcoin purchases were planned for the national strategic reserve.

Bitcoin has rebounded to above $81,000 at the time of writing. 

The tariff dispute follows Trump’s tariffs on Canadian and Mexican goods. Canada and Mexico have pushed back, citing trade agreement violations.

There’s a 70% chance that the trade war between Canada and the U.S. will be over by May, according to odds on a Polymarket contract on the topic, as Commerce Secretary Howard Lutnick told Fox Business that U.S. President Donald Trump was open to negotiation.

On Tuesday morning, Canada and Mexico faced the implementation of 25% tariffs on all products entering the U.S., with President Trump citing their failure to curb fentanyl trafficking and illegal immigration as a national security threat.

But later in the day, Lutnick appeared to offer a potential avenue for negotiation, with odds rising 20% in a few hours on Polymarket.

I think [Trump is] going to work something out with them,” Lutnick said on Fox Business. “It’s not going to be a pause, none of that pause stuff, but I think he’s going to figure out: you do more, and I’ll meet you in the middle someway and we’re going to probably announce that tomorrow.”

Lutnick’s comments also appeared to calm crypto markets on ‘Turnaround Tuesday’ with bitcoin (BTC) up 1.5% and trading comfortably above $87,000, according to CoinDesk Indices data.

The CoinDesk 20 (CD20), a measure of the performance of the world’s largest digital assets, is up 2% on the news.