In a dramatic turn, former U.S. President Donald Trump abruptly scrapped his plan to double tariffs on Canadian steel and aluminum imports.
The sudden reversal came just hours after he vowed to push the tariffs to 50%. However, the existing 25% tariffs remained intact and took effect on Wednesday.
Trump’s change of course wasn’t random. Ontario Premier Doug Ford had just suspended a 25% surcharge on electricity exports to the U.S.
The surcharge, which targeted northern U.S. states, was Ontario’s counterstrike against Trump’s aggressive tariff policies. With both nations teetering on the edge of an all-out trade war, economic tensions threatened to spiral out of control.
White House trade adviser Peter Navarro later admitted, “Cooler heads prevailed.”
Canada, America’s closest trading partner, has repeatedly found itself in Trump’s crosshairs. His administration first slapped a blanket 25% tariff on Canadian and Mexican steel and aluminum, citing national security concerns.
Though certain products received exemptions, Canada viewed the tariffs as unjust and retaliated with its own economic measures.
In response, Canada imposed tariffs on $22 billion worth of U.S. goods. Premier Ford took it a step further, warning that Ontario might completely cut off electricity exports if the U.S. escalated the situation.
On Tuesday, Trump took to social media with his signature bravado. He accused Canada of taking advantage of U.S. military protection and even suggested that Canada should become America’s 51st state.
According to him, such a move would eliminate all tariffs and trade conflicts.
The White House later spun Trump’s decision as a calculated victory. Officials claimed he had “once again used the leverage of the American economy to secure a win for the American people.”
Tariffs function as taxes on imported goods. Importers bear the cost, but the burden often shifts to consumers and businesses through higher prices. Many U.S. companies have voiced frustration over Trump’s aggressive trade policies.
Jason Goldstein, owner of Icarus Brewing in New Jersey, has already felt the sting. “Aluminum costs are rising, and it’s directly hitting our bottom line. I’ve never had to monitor trade news so closely just to plan my business,” he said.
Trump’s trade maneuvers continue to shake global markets. The S&P 500 tumbled 0.7% on Tuesday, following a sharp 2.7% drop the previous day.
European markets, including the UK’s FTSE 100, also took a hit as investors reacted to the uncertainty.
Premier Ford described his decision to pause the electricity surcharge as an effort to “de-escalate tensions” and shift focus toward broader trade negotiations.
He announced plans to visit Washington alongside Canada’s Finance Minister to discuss updates to the United States-Mexico-Canada Agreement (USMCA).
“We want a fair and free trade deal with our closest allies,” Ford stated. However, he hinted that Ontario could reinstate the surcharge if necessary, emphasizing that he would not hesitate to use economic tools to counteract U.S. tariffs.
Trump’s retreat may not be the end of the battle. He has warned that unless Canada eliminates its “long-time unfair tariffs,” he could impose even harsher measures.
A significant tariff hike on Canadian car exports to the U.S. remains on the table, a move that could devastate Canada’s auto industry.
The ongoing dispute underscores the fragile economic relationship between the two nations. While negotiations continue, the looming threat of future trade conflicts remains ever-present.
Clark is a 26-year-old expert working for consumer protection, Clark has dedicated years to identifying and exposing fraudulent schemes. He is working with NGOs to help people who are victims of scams. In his free time, Todd plays football or goes to a bar.
