US President Donald Trump on Tuesday pulled back from his decision to raise tariffs on Canadian steel and aluminium from 25% to 50%, said White House trade adviser Peter Navarro, reports Associated Press.
The threat was a response to Ontario’s decision to impose surcharges on electricity exports to the US. However, Trump retreated after Ontario Premier Doug Ford agreed to drop the surcharge.
“He has to bounce it off the president but I’m pretty confident he will pull back,” Ford said on Trump’s steel and aluminum tariff threat. “By no means are we just going to roll over. What we are going to do is have a constructive conversation.”
The US government, however, is still proceeding with the 25% tariff on all steel and aluminium imports, adding to economic uncertainty.
In a social media post early Tuesday, Trump justified his threat to double tariffs on Canadian steel and aluminium, saying it was a response to Ford’s actions. He also criticised Canada for depending on the US for military protection and repeated his call for the country to become the 51st US state. Trump added that if Canada joined the US, “all tariffs, and everything else, would totally disappear.”
The trade tensions have worsened relations between the US and Canada. Mark Carney, set to replace Justin Trudeau as Canada’s Prime Minister, has pledged to keep tariffs on US goods in place until the US government shows “respect” and commits to free trade. Canada had already imposed $30 billion in retaliatory tariffs on American products, including orange juice, peanut butter, coffee, and appliances.
Trump has defended tariffs as a key tool for protecting American industries, but markets have reacted negatively. The stock market has been on a downturn, with the S&P 500 dropping 2.7% on Monday and continuing to slide on Tuesday. The Dow Jones Industrial Average lost 478 points, further erasing gains from Trump’s 2024 election victory.
The tariff strategy has also raised concerns about a potential recession. Harvard economist Larry Summers estimates a 50% chance of an economic downturn, while Goldman Sachs has revised its US growth forecast downward. Trump has downplayed these fears, insisting that tariffs will eventually benefit the US economy by pushing companies to relocate factories to American soil.
