A major Canadian official on Tuesday backed off his decision to put a 25% surcharge on the electricity it sends to U.S. communities after President Trump threatened to increase tariffs on Canadian steel and aluminum from 25% to 50% as payback.
Ontario Premier Doug Ford reversed the price increase after speaking to U.S. Commerce Secretary Howard Lutnick, prompting the White House to say it would maintain the metal tariff at 25% instead of raising it.
“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 spokesman Kush Desai said. “Pursuant to his previous executive orders, a 25 percent 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.”
Mr. Trump, incensed by the electricity surcharge amid a U.S.-Canadian trade spat, had said the higher levy would take effect Wednesday and that he would declare an emergency in the parts of the U.S. affected by the surcharge.
“This will allow the U.S. to quickly do what has to be done to alleviate this abusive threat from Canada,” Mr. Trump wrote on Truth Social.
The threat appeared to work since Mr. Ford backed down.
Also Wednesday, Mr. Trump said that unless Canada drops levies on farm goods and other U.S. products, he will impose tariffs on cars from Canada on April 2, “which will, essentially, permanently shut down the automobile manufacturing business in Canada.”
“Those cars can easily be made in the USA!” he said.
Mr. Trump is waging a trade war with Canada even as Wall Street frets over the whipsaw news out of Washington. The president says the U.S. suffers from a trade imbalance with Canada and that Ottawa isn’t doing enough to crack down on fentanyl trafficking, so he must use tariffs to get a fairer deal.
The president agreed to pause broad tariffs on Canada and Mexico until April, but investors seek certainty. They were also spooked by Mr. Trump’s refusal in a recent interview to rule out a recession in the U.S.
The stock market continued its topsy-turvy ride Tuesday, with the Dow Jones Industrial Average dropping over 450 points, or 1.14%, while the S&P 500 and Nasdaq Composite both fell less than a percentage point.
Citigroup recently downgraded U.S. stocks, saying “U.S. exceptionalism is at least pausing.”
The White House says the president is working to shake off the Biden era and implement tax cuts and deregulation.
“We are in a period of economic transition,” White House press secretary Karoline Leavitt said at her Tuesday briefing. “Joe Biden left this country in an economic disaster.”
Mr. Ford announced his province’s electricity surcharge on Monday, saying he had no choice but to act in the face of Mr. Trump’s trade threats.
“I apologize to the American people. There’s one person to be blamed, and that’s Donald Trump,” Mr. Ford said on CNBC’s “Money Movers.” “If we go into a recession, it will be called the Trump recession — no one else.”
Mr. Trump countered by saying Canada would have less to worry about if it became the 51st state.
“The artificial line of separation drawn many years ago will finally disappear, and we will have the safest and most beautiful Nation anywhere in the World — And your brilliant anthem, ‘O Canada,’ will continue to play, but now representing a great and powerful state within the greatest Nation that the World has ever seen!” he wrote on Truth Social.
Mr. Trump also says tariffs would become a non-issue if Canada were a U.S. state.
Tariffs are a tax or duty paid by importers on the goods they bring in from foreign countries. Mr. Trump says tariffs are a great way to force companies to return to America or keep their operations in the U.S., employ American workers, and create revenue to fund domestic programs.
The White House frequently characterizes tariffs as a tax on foreign entities, though other nations don’t pay the tariffs directly to the U.S. Treasury. In many cases, U.S. companies that are the “importers of record” will pay the levies, and they might pass on at least some of the cost to consumers through higher prices.
Mr. Trump imposed a 25% tariff on imported steel and aluminum earlier this year. He is increasing that amount by 25% for Canada, resulting in a 50% increase.
The tariffs are designed to protect U.S. metal workers from the flood of cheap steel, notably from China, that tends to undercut domestic producers.
Critics, including the Competitive Enterprise Institute, argue that while the tariffs might create some jobs in metals industries, they could lead to higher prices and reduced competition across various sectors that rely on these materials, such as automobiles and houses.
They suggest the economic impact might be counterproductive in net because of the small scope of the steel and aluminum industries, noting that the U.S. employs more people as manicurists than in those two industries combined.
