U.S. President Donald Trump’s warning Tuesday that he would double planned tariffs on Canadian steel and aluminum to 50% from 25% has caused the Ontario government to suspend plans to impose a surcharge on electricity sold to the United States.
As a result, White House trade adviser Peter Navarro said Trump withdrew his plan to double steel and aluminum tariffs, but the federal government still plans to impose a 25% tariff on all steel and aluminum imports starting Wednesday.
Tuesday’s dramatic developments gave Trump a win, but also heightened concerns about tariffs that have roiled the stock market and raised fears of a recession.
Trump shocked the market Tuesday morning by saying he would raise tariffs on Wednesday in response to Ontario’s 25% increase in the price it sells electricity to the United States.
“I have directed the Secretary of Commerce to increase the additional 25% tariff on all steel and aluminum coming into the United States from Canada to 50%, which is one of the highest tariffs in the world,” Trump said in a post on Truth Social.
Ontario Premier Doug Ford said Tuesday afternoon that U.S. Commerce Secretary Howard Lutnick called him and Ford agreed to cancel the additional tariffs. He said he believes Trump will also abandon his plan to impose a 50% tariff on Canadian steel and aluminum.
“He has to report to the president, but I’m very confident that he will walk back his comments,” Ford said of Trump’s threat of steel and aluminum tariffs. “We will never give in. What we have to do is have a constructive dialogue.”
After a stock market crash on Monday and further panic on Tuesday, Trump said Tuesday that tariffs are essential to changing the U.S. economy, no matter how the stock market fluctuates.
Canada is usually a staunch ally of the United States and is the second largest trading partner of the United States after Mexico. Trump launched an economic war with Canada last week and then delayed for a month the implementation of a 25% tariff on all Canadian exports to the United States. Trump said he was putting pressure on Canada to further curb the flow of illegal immigration and illegal drugs, especially the deadly opioid fentanyl, into the United States.
White House press secretary Karoline Leavitt told reporters that Trump increased the steel and aluminum tariffs because “Canada has been ripping off the United States of America and hardworking Americans for decades.”
In his post on Tuesday, Trump also reiterated his intention to make Canada the 51st state of the United States.
“This will make all tariffs and everything else completely go away,” Trump argued. “Canadian taxes will be significantly reduced, they will be more secure militarily and otherwise than ever before, there will be no more northern border problems, and the greatest and most powerful nation in the world will be bigger, better and stronger than ever before — and Canada will be a big part of that.” U.S.-
Canada tensions
After Trump warned of a historic financial disaster for Canada, incoming Canadian Prime Minister Mark Carney said his government will maintain tariffs until the United States shows respect and is committed to free trade.
Carney, who will be sworn in as the new prime minister in the coming days, said Trump’s latest tariffs are an attack on Canadian workers, families and businesses.
“My government will maintain tariffs until the United States shows us respect and makes 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 aluminum tariffs, which are expected to be announced on Wednesday.
Carney was referring to initial retaliatory tariffs worth C$30 billion ($21 billion) on U.S. products such as orange juice, peanut butter, coffee, appliances, footwear, cosmetics, motorcycles and certain pulp and paper products.
Trump has also imposed a 25% tariff on Mexico over his grievances with drug trafficking and illegal immigration, though he suspended the levies for a month on imports that qualify for the 2020 U.S.-Mexico-Canada Agreement (USMCA).
Asked if Mexico was concerned it could face the same 50% steel and aluminum tariffs as Canada, Mexican President Claudia Sheinbaum said, “No, we respect that.”
Trump took part in a question-and-answer session Tuesday afternoon with the Business Roundtable, a trade association of CEOs whose support he courted during his 2024 campaign by promising to lower corporate tax rates for domestic manufacturers. But his tariffs on Canada, Mexico, China, and plans for more on Europe, Brazil, South Korea, pharmaceuticals, copper, lumber and computer chips amount to significant tax hikes.
“Tariffs are having a huge positive effect – they will, and they are having.” Trump said at the Business Roundtable that import taxes will lead to more factories moving to the United States.