U.S. President Donald Trump has dropped plans to double tariffs on Canadian steel and aluminum to 50%, just hours after making the threat. However, a 25% tariff will still take effect on March 12.
The reversal follows Ontario’s decision to suspend new electricity charges on U.S. exports, a move seen as an effort to de-escalate tensions.
Trump trade adviser Peter Navarro confirmed the shift, stating, “Cooler heads prevailed.”
Canada remains a primary target in Trump’s trade disputes, with existing 25% tariffs on steel and aluminum set to take effect after exemptions for certain countries were revoked. In response, Canada has imposed counter-tariffs on $22 billion worth of U.S. products.
Ontario Premier Doug Ford had initially threatened to tax or halt electricity exports to the U.S. but later withdrew the measures, citing a need to refocus negotiations on broader trade agreements.
He acknowledged that both sides needed to "bring the temperature down" and credited U.S. Commerce Secretary Howard Lutnick for facilitating dialogue.
Trump, in a social media post, had linked his tariff threats to Ford’s electricity stance and criticized Canada’s reliance on U.S. military protection.
He also controversially suggested that Canada could resolve trade disputes by becoming the 51st U.S. state.
The White House framed the episode as a victory, asserting that Trump had leveraged economic strength for American interests.
Meanwhile, markets reacted negatively, with the S&P 500 declining 0.7% on Tuesday after a 2.7% drop the previous day.
The UK’s FTSE 100, along with French and German indexes, also saw declines. Investor concerns over Trump’s trade policies and potential inflationary effects contributed to the downturn.
