US President Donald Trump has threatened to double tariffs on vehicles imported from Canada, escalating an already tense trade dispute between the two North American neighbours.
Trump’s latest threat came after the US and Canada failed to reach an agreement that would have prevented new 50 percent US tariffs on selected Canadian goods.
The new duties took effect on Saturday, prompting Ottawa to prepare retaliatory measures against American products.
The escalating trade dispute has added fresh uncertainty to global markets, even as several stock markets gained on Tuesday and oil prices remained volatile.
The Canadian dollar also recovered slightly against the US dollar after falling on Monday following Trump’s tariff announcement.
The trade tensions came as Washington intensified its economic pressure on Iran.
US Treasury Secretary Scott Bessent declared an “economic D-Day” against Tehran and warned countries trading with Iran that they could face penalties.
Bessent said the US wants to cut off the economic channels supporting what he described as Iran’s “tyrannical regime.”
He said President Trump had personally contacted world leaders, urging them to stop economic dealings with Tehran.
The US Treasury also announced plans to target Iran’s digital assets, technology, gold, aviation and shipping sectors with fresh sanctions.
Oil prices initially fell by more than two percent after Bessent’s remarks suggested Washington was favouring economic pressure over further military escalation.
Prices later recovered slightly in early Asian trading as investors continued to monitor developments.
Global equities were largely positive despite a weak close on Wall Street.
Markets in Tokyo, Hong Kong, Shanghai, Taipei, Singapore, Sydney and Wellington ended higher, while Manila, Mumbai and Bangkok recorded losses.
European markets also edged higher, supported partly by stronger-than-expected German economic growth in the second quarter.
Investors are now turning their attention to major economic and corporate events this week.
Nvidia’s earnings report is among the most anticipated, with investors watching for signs of continued strength in the global artificial intelligence boom.
Results from Salesforce and Marvell will also be closely monitored.
Markets are equally focused on comments from Federal Reserve Chair Kevin Warsh at the annual Jackson Hole gathering, particularly as inflation remains stubborn and long-term US Treasury yields stay elevated.
With Washington simultaneously escalating trade pressure on Canada and economic sanctions against Iran, investors face another week of heightened uncertainty.
Ottawa’s response to Trump’s tariff threat could determine whether the dispute develops into a broader trade war or returns to negotiations.
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