Trump Suspends Plan for 50% Steel and Aluminum Tariffs on Canada
Trump Backs Down on Doubling Tariffs on Canadian Steel and Aluminum
Donald Trump has reversed his plan to double U.S. tariffs on Canadian steel and aluminum imports to 50%, just hours after initially threatening the increase.
The existing 25% tariffs, however, remained in place and took effect on Wednesday.
The reversal came after Ontario, Canada’s most populous province, suspended its planned 25% charge on electricity exports to some northern U.S. states. This move followed Trump’s threat to escalate tariffs on Canada.
The episode marked another clash in the ongoing trade tensions between the two North American neighbors, which could have significant economic consequences.
“Cooler heads prevailed,” Trump trade adviser Peter Navarro told CNBC, confirming that the president would not proceed with the tariff hike.
Tensions in U.S.-Canada Trade Relations
Canada, one of America’s closest trade partners, has been a frequent target of Trump’s trade policies. His administration had already imposed a 25% tariff on Canadian goods, including steel and aluminum, though certain products were temporarily exempted. Trump justified the tariffs as a response to drug trafficking and illegal immigration.
In retaliation, Canada announced countermeasures, imposing tariffs on C$30 billion ($22 billion) worth of U.S. goods.
Ontario Premier Doug Ford had initially proposed taxing electricity exports to the U.S. in an effort to pressure Trump to lift the tariffs. He had even warned of a complete cutoff of electricity if the U.S. escalated the dispute. However, Ford later reversed the decision, citing the need to focus on broader North American trade negotiations.
“With any negotiation, there’s a point where tensions rise, and then we need to bring the temperature down,” Ford said. He credited U.S. Commerce Secretary Howard Lutnick for reaching out to discuss a meeting.
Trump’s early Tuesday social media post, in which he threatened to double tariffs, was reportedly a direct response to Ford’s moves. He also criticized Canada for relying on U.S. military protection and controversially suggested that if Canada became the 51st U.S. state, all tariffs and trade conflicts would disappear.
The White House hailed the resolution as a victory, stating that Trump had “once again used the strength of the American economy to secure a win for the American people.”
Market Reaction and Economic Concerns
The tariff uncertainty rattled global markets. On Tuesday, the S&P 500 fell another 0.7% after a steep 2.7% drop on Monday—the index’s worst single-day decline since December.
Stock markets in Europe also reacted negatively. The UK’s FTSE 100, France’s CAC 40, and Germany’s DAX all experienced declines following Trump’s comments.
Investors remain concerned about the broader economic impact of Trump’s trade policies, with fears of rising inflation and business uncertainty. The president’s remarks on Monday about the U.S. economy being in a “transition” fueled speculation about a potential recession.
Businesses Struggle with Uncertainty
Even before Trump’s latest tariff threats, U.S. businesses had already been feeling the impact.
Jason Goldstein, founder of New Jersey-based Icarus Brewing, told the BBC that tariff-related price hikes on raw materials like grain and aluminum cans had disrupted his operations.
To mitigate risk, Goldstein stockpiled an extra month’s supply of cans and postponed purchases.
“It’s definitely a worrying time for us,” he said. “I’ve never had to follow the news so closely just to understand what my industry might look like tomorrow.”