US President Donald Trump has reversed his decision to double tariffs on Canadian steel and aluminium imports to 50%, mere hours after initially threatening the increase. However, the current tariffs of 25% will still proceed, taking effect on March 12.
Trump’s decision to ease off the tariff hike followed Ontario’s suspension of a planned 25% charge on electricity exports to some northern US states. This move by Ontario came shortly after Trump threatened to sharply increase tariffs on Canadian steel and aluminium, marking another episode in the ongoing trade tensions between the two countries.
“Cooler heads prevailed,” said Peter Navarro, Trump’s trade adviser, in an interview with CNBC, confirming that the president had backed away from the 50% tariff threat.
Canada, one of the US’s closest trade partners, has been hit hard by Trump’s trade policies, including the 25% tariffs on steel and aluminium. The tariffs were initially imposed as part of a broader campaign targeting trade imbalances and immigration issues. In response, Canada announced retaliatory tariffs on US$22 billion (C$30 billion) worth of US products.
Ontario’s Premier Doug Ford had earlier threatened to impose tariffs on electricity exports to the US and had even hinted at shutting off power completely if the US escalated the trade dispute. However, Ford later announced the suspension of these tariffs, citing a desire to ease tensions and refocus discussions on the North American Free Trade Agreement (NAFTA). He thanked US Commerce Secretary Howard Lutnick for reaching out to facilitate dialogue.
“With any negotiation, there’s a point where both parties are heated, and the temperature needs to come down,” said Ford. “We need to sit down and move this forward.”
Earlier on Tuesday, Trump had posted on social media, threatening to double the levies on Canadian metals in response to Ford’s moves. He also criticized Canada for relying on the US for military protection and reiterated his suggestion that Canada should become the 51st state of the United States, claiming that such a move would eliminate all tariffs and trade disputes.
The White House framed the resolution as a victory, declaring that Trump had used the strength of the American economy to achieve a favorable outcome for US workers.
Meanwhile, the stock markets experienced turbulence amid the escalating trade tensions. The S&P 500 fell 0.7% on Tuesday, following a 2.7% drop on Monday—the largest single-day decline since December. European markets, including the UK’s FTSE 100, France’s Cac 40, and Germany’s Dax, also closed lower following Trump’s comments. Investors remain concerned about the broader economic effects of Trump’s trade policies, fearing inflation and uncertainty that could stifle economic activity.
