Trump's 50% tariff hammer on Canadian cars and steel sends gold to $4,651 — investors flee to safety as trade war escalates

25 August 2026 | Washington, Ottawa, New York — Updated 23:45 GMT

Donald Trump announced a new 50% tariff on automobiles and crucial raw materials from Canada, the latest deterioration in trade relations between the two neighbors with historically strong economic ties.

The US president said that the increased tariffs would start on 1 January 2027 on all cars, trucks, automobile parts and steel. He also derided the nation's tariffs on American farmers, writing on social media that Canada has been "ripping off" the US "for years".

"On Trade, and in other ways, also, they are among the worst Nations in the World to deal with," he wrote on Truth Social. "They feel entitled, and yet, WE DON'T NEED CANADA, THEY NEED US! They do 95% of their business with the U.S., with us, the exact opposite!"

Gold prices hit their highest level in more than three months on Tuesday as continued conflict in the Middle East and ongoing political uncertainty fuelled the latest rally in the precious metal. Gold is viewed as a safe haven by investors and its price tends to rise at times of uncertainty.

Welcome to the latest world headlines — where trade wars, safe-haven assets, and economic uncertainty collide.

Trump Announces 50% Tariff on Canadian Automobiles and Steel in Latest Trade War Escalation

Donald Trump announced a new 50% tariff on automobiles and crucial raw materials from Canada, the latest deterioration in trade relations between the two neighbors with historically strong economic ties.

The US president said that the increased tariffs would start on 1 January 2027 on all cars, trucks, automobile parts and steel. He also derided the nation's tariffs on American farmers, writing on social media that Canada has been "ripping off" the US "for years".

"On Trade, and in other ways, also, they are among the worst Nations in the World to deal with," he wrote on Truth Social. "They feel entitled, and yet, WE DON'T NEED CANADA, THEY NEED US! They do 95% of their business with the U.S., with us, the exact opposite!"

In response, Mark Carney told reporters on Monday that Trump's announcement was largely expected.

"It's not a surprise for us that the US would take some form of reprisal to our response to their unjustified tariff, which was on top of other unjustified tariffs," the Canadian prime minister said from Quebec.

"But what message does that send to the workers in Michigan, in Ohio, in Kentucky, in Alabama, who rely on Canadian demand?" Carney continued. "We're their largest customer for automobiles, more than the European Union, Japan, Korea, many others combined, and the United Kingdom."

He added that Canada would be ready to move forward with talks "when the Americans go to the negotiating table first with the right attitude toward our industry and a true partnership".

Trade War Escalates After Collapse of Potential Deal Over Weekend

Trump's announcement follows the last-minute collapse this weekend of a potential deal to lower tariffs on automobiles and other materials. After Trump imposed another 50% tariff on $20bn worth of Canadian exports, including hockey equipment and electronics, Carney rejected the latest deal between the two nations on Saturday.

Carney said that the US "asked too much and they offered too little", and he has vowed to match the American tariffs "dollar for dollar".

Canada and the US have been longtime partners, trading roughly $909bn, according to the office of the US trade representative. But Trump's second presidential term and his aggressive trade policies have brought the era of "deep ties" between the two nations to a close, Carney said last year, vowing to fight Trump's sweeping tariffs.

Gold Hits Three-Month High as Investors Seek Safe Haven from Trade War and Iran Fears

Gold prices hit their highest level in more than three months on Tuesday as continued conflict in the Middle East and ongoing political uncertainty fuelled the latest rally in the precious metal.

Gold is viewed as a safe haven by investors and its price tends to rise at times of uncertainty.

The metal has risen by about 15% so far during August, reaching $4,651 (£3,410) an ounce during Asian trading hours on Tuesday, before falling back slightly. This put gold on track for its best monthly performance in almost 30 years, since September 1999.

The price of gold began to rise in early August amid optimism that the US and Iran were getting closer to restoring a ceasefire in the Middle East and reopening the strait of Hormuz. While this did not happen, the price of gold has continued to climb.

The latest rises came as investors awaited US inflation data and a closely watched speech from the new US Federal Reserve chair, Kevin Warsh, amid anxiety in government bond markets over inflation and Donald Trump's tax and spending plans.

"Looking ahead, we expect dips in gold to be well-supported from buyers looking for gold to make its way towards the next upside resistance at $4,900/$5,000," said Tony Sycamore, a market analyst at the broker IG.

Bitcoin Breaks $80,000 as Investors Hedge Against Uncertainty

The price of bitcoin climbed above $80,000 (£58,680) on Tuesday, taking the cryptocurrency to a three-month high not seen since mid-May, which analysts attributed to a weakening US dollar and similar factors that were driving gold higher.

The biggest rally in gold since the 1970s began in 2025, after Trump first announced the introduction of tariffs on imported goods, prompting fears of disruption to global trade.

The price topped $4,000 an ounce for the first time last October, before passing $5,000 in January and reaching a record high at the end of that month, partly fuelled by shifts in US policy, as well as political uncertainty elsewhere, including in France and Japan.

However, many investors were surprised to see the price fall back again earlier this year, reaching $3,942 in late June, despite the ongoing conflict in the Middle East.

War and geopolitical uncertainty would usually raise the gold price, making the fall counterintuitive. However, analysts said the US-Iran conflict has also driven oil prices higher, along with expectations of higher inflation and interest rate rises, which are factors that can subdue the gold price, outweighing demand for it as a safe store of wealth.

Analysts: Gold Acting as 'Hedge Against Unclear US Fiscal Plans'

There is renewed appetite for gold among investors as a "hedge against unclear US fiscal plans", as a "hedge against inflation, amid questions over the Fed's willingness, or ability, to fight inflation independently" and as a hedge against worries about the AI boom, according to Ipek Ozkardeskaya, a senior analyst at the Swiss banking group Swissquote.

It comes as Trump has announced fresh tariffs on cars and crucial raw materials from Canada, marking the latest deterioration in relations between the two neighbours, while the US has threatened to impose severe sanctions against any country or entity maintaining economic ties with Iran.

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