Trump halts doubling of tariffs on Canadian metals, after Ontario suspends electricity price hikes
Wednesday, 12 March 2025
US President Donald Trump 's threat to double his planned tariffs on steel and aluminium from 25% to 50% for Canada has led the provincial government of Ontario to suspend its planned surcharges on electricity sold to the United States.
As a result, the White House trade adviser Peter Navarro said the US president pulled back, even as the federal government still plans to place a 25% tariff on all steel and aluminium imports starting on Wednesday (local time).
The drama on Tuesday delivered a win for Trump but also amplified concerns about tariffs that have roiled the stock market and stirred recession risks. Tuesday's escalation and cooling in the ongoing trade war between the United States and Canada only compounded the rising sense of uncertainty of how Trump's tariff hikes will affect the economies of both countries.
Trump shocked markets Tuesday morning by saying that the increase of the tariffs set to take effect on Wednesday had been a response to the 25% price hike that Ontario put on electricity sold to the United States.
“I have instructed my Secretary of Commerce to add an ADDITIONAL 25% Tariff, to 50%, on all STEEL and ALUMINUM COMING INTO THE UNITED STATES FROM CANADA, ONE OF THE HIGHEST TARIFFING NATIONS ANYWHERE IN THE WORLD,” Trump posted on Truth Social.
Ontario Premier Doug Ford said on Tuesday afternoon that US Commerce Secretary Howard Lutnick called him and Ford agreed to remove the surcharge. He said he was confident that the US president would also stand down on his own plans for 50% tariffs on Canadian steel and aluminium.
“He has to bounce it off the president but I’m pretty confident he will pull back,” Ford said on Trump’s steel and aluminium tariff threat. “By no means are we just going to roll over. What we are going to do is have a constructive conversation.”
After a brutal stock market sell-off on Monday and further jitters Tuesday, Trump faces increased pressure to show he has a solid plan to grow the economy. So far the president is doubling down on tariffs and can point to Tuesday's drama as evidence that taxes on imports are a valuable negotiating tool, even if they can generate turmoil in the stock market.
Trump suggested Tuesday that tariffs were critical for changing the US economy, regardless of stock market gyrations.
The US president has given a variety of explanations for his antagonism of Canada. He has said that his separate 25% tariffs on all imports from Canada, some of which are suspended for a month, are about fentanyl smuggling and voicing objections to Canada putting high taxes on dairy imports that penalize US farmers.
He also continued to call for Canada to become part of the United States as a solution, which has infuriated Canadian leaders.
“The only thing that makes sense is for Canada to become our cherished Fifty First State,' Trump posted Tuesday. 'This would make all Tariffs, and everything else, totally disappear.”
Tensions between the United States and Canada
Incoming Canadian Prime Minister Mark Carney said his government will keep tariffs in place until Americans show respect and commit to free trade after Trump threatened historic financial devastation for his country.
Carney, who will be sworn in as Justin Trudeau’s replacement in coming days, said Trump’s latest tariffs are an attack on Canadian workers, families and businesses.
“My government will keep our tariffs on until the Americans show us respect and make credible, reliable commitments to free and fair trade,” Carney said in a statement.
Canadian officials are planning retaliatory tariffs in response to Trump’s specific steel and aluminium tariffs. Those are expected to be announced Wednesday.
Carney was referring to an initial CAD$30 billion worth of retaliatory tariffs that have been applied on items like American orange juice, peanut butter, coffee, appliances, footwear, cosmetics, motorcycles and certain pulp and paper products.