WASHINGTON/OTTAWA--President Donald Trump reversed course on Tuesday afternoon on a pledge to double tariffs on steel and aluminum from Canada to 50%, just hours after announcing the higher tariffs, in rapid-fire moves that scrambled financial markets. The switch came after a Canadian official also backed off his own plans for a 25% surcharge on electricity.
Trump's latest salvo, which whipsawed financial markets and rekindled fears of inflation, followed Ontario Premier Doug Ford's announcement that he would place a 25% surcharge on the electricity Canada's most populous province supplies to more than 1 million U.S. homes unless Trump dropped all of his tariff threats against Canada's exports into the U.S.
Faced with Trump's 50% tariff threat, Ford agreed to suspend the surcharge and meet with U.S. Commerce Secretary Howard Lutnick in Washington on Thursday. The White House then announced that only the previously planned 25% tariffs on steel and aluminum products from the United States' northern neighbour and all other countries would take effect on Wednesday - with no exceptions or exemptions.
"President Trump has once again used the leverage of the American economy, which is the best and biggest in the world, to deliver a win for the American people," White House spokesperson Kush Desai said in a statement. "Pursuant to his previous executive orders, a 25% tariff on steel and aluminum with no exceptions or exemptions will go into effect for Canada and all of our other trading partners at midnight, March 12th.”
The back-and-forth between the U.S. and Canada further unsettled financial markets already battered by Trump's focus on tariffs. After tumbling hard after Trump's initial post on Truth Social, stocks rebounded after Ford said he would suspend the surcharge and Ukraine agreed to a 30-day ceasefire.
The S&P 500 index dropped as low as 5,528.41 points, briefly marking a 10% fall from its record closing high of 6,144.15 on February 19, which is commonly known as a market correction. U.S. stocks have fallen hard since reaching a record high about a month after Trump took office on January 20, with nearly $5 trillion of market value erased from U.S. indexes.
Trump triggered the selloff with a morning post on his Truth Social media platform, saying he had instructed Lutnick to put an additional 25% tariff on the metals products from Canada that take effect on Wednesday, on top of the 25% on all imported steel and aluminum products from other countries.
He also criticized Canada for trade protections on dairy and other agricultural products and threatened to "substantially increase" duties on cars coming into the U.S. that are set to take effect on April 2 "if other egregious, long time Tariffs are not likewise dropped by Canada."
The U.S. president shook off the market gyrations, telling reporters that markets would go up and down, but that he had to rebuild the economy.Trump, heartened by Ontario's move, said the tariff rates could rise further, building pressure on countries to move manufacturing into the United States.
"The higher it goes, the more likely it is they're going to build ... The biggest win is not the tariffs. That's a big win. It's a lot of money. But the biggest win is they move into our country and produce jobs," he said, insisting the tariffs would "be throwing off a lot of money to this country."
