An employee covers a stack of aluminum billets at a casting center in Saguenay, Quebec. (Christinne Muschi)
President Donald Trump said he was re-evaluating plans to double steel and aluminum tariffs on Canada to 50% after Ontario announced it would suspend a 25% surcharge on electricity sent to the U.S.
“I’m looking at that, but probably so,” Trump told reporters March 11 when asked if the de-escalation would lead him to back down on his tariff threat. “I’ll let you know about it.”
Trump’s reconsideration looked to calm a brief but dramatic volley in the widening trade war between the U.S. and Canada that has rocked markets and hung a cloud of uncertainty across major North American industries.
The president spoke minutes after Ontario Premier Doug Ford and U.S. Commerce Secretary Howard Lutnick announced that they would meet March 13 in Washington and that the province would suspend its plans to slap a surcharge on electricity exports to the U.S.
Ford and Lutnick “had a productive conversation about the economic relationship between the United States and Canada,” the pair said in a statement.
(Justin Tang/The Canadian Press via AP)
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The announcement came hours after Trump posted to social media that he was doubling metal tariffs set to take effect shortly after midnight, and also said he would “substantially increase” levies on Canadian automobile parts on April 2 if Ottawa does not drop tariffs on dairy products and other U.S. goods.
The move would “essentially, permanently shut down the automobile manufacturing business in Canada,” Trump said. The president reiterated his belief that Canada should become a part of the U.S., saying it would “make all Tariffs, and everything else, totally disappear.”
Canada is the main source of aluminum for U.S. industry, and the auto plants Trump is threatening to shut down are owned by U.S. automakers.
The back and forth marked the latest escalation in the trade dispute between the two nations and risked further upsetting markets that have posted steady losses since the president moved forward last week with an initial round of tariffs on Canada and Mexico. U.S. stocks resumed their decline after Trump said he would double the tariffs; the S&P 500 Index was down 0.45% at 2:53 p.m. in New York, while the Dow Jones Industrial Average fell by 0.4%.
“President Trump’s latest tariffs are an attack on Canadian workers, families and businesses,” Canadian Prime Minister-Designate Mark Carney said in a social media post. “My government will ensure our response has maximum impact in the U.S. and minimal impact here in Canada, while supporting the workers impacted.”
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At the White House earlier March 11, Press Secretary Karoline Leavitt said Trump made the decision based on what the U.S. saw as “egregious and insulting” comments from Ford, who originally announced the surcharge on Canadian energy sent to the U.S.
The increasingly dramatic exchanges underscored the shifting and unpredictable nature of trade under the new administration and the extent to which they rest on the whims of the president. Industry experts supporting the steel and aluminum tariffs were taken off guard, according to people familiar with the matter, indicating Trump had not widely discussed doubling tariffs on Canada on the eve of their implementation.
Trump’s trade fight is a stark departure from his first-term agenda, where tariffs were widely threatened but ultimately applied mostly to China and certain sectors, including steel and aluminum, said Marc Short, who served as chief of staff to Vice President Mike Pence in Trump’s first term.
“I think it’s dramatically different than the first administration, and I think one of the biggest challenges is markets look at it and say, you know, this is just part of his bluster, right?” Short said. “I think markets just assumed it would be the same, that it’s just negotiation, and it’s not.”
Trump’s move also comes as Canada is set to have a new prime minister — providing a test for Carney, who is poised to take over from Justin Trudeau as soon as this week.
“There is nothing that has benefited the Liberal Party of Canada more than the president’s trade policy,” Short said.
Early in his term, Trump imposed 25% duties on Canadian and Mexican goods, only to subsequently delay the move for one month. When the tariffs went into effect last week, the U.S. president within days moved to exempt products covered under USMCA, a North American free trade agreement he negotiated during his first term, after markets dropped and at the urging of U.S. auto manufacturers.
Another planned wave of tariffs could hit as soon as April. Trump plans to impose “reciprocal” duties that he considers equivalent to countries’ tariffs, nontariff barriers and certain taxes, including Canada’s 5% general sales tax, which is applied to nearly all purchases domestically. Trump has regularly complained about Canada’s dairy tariffs, which are a part of the country’s protected system of production quotas, known as supply management.
Canadian Response
Ontario’s energy taxes put price pressure on Americans whose budgets are already strained by persistent inflation.
New York imported about 4.4% of its total electricity from Canada in 2023, according to Bloomberg calculations using data from the state’s grid operator. The percentage for Minnesota and Michigan is even less, according to the Midcontinent Independent System Operator, the region’s grid operator.
Canada’s federal government has also imposed tariffs on items like American orange juice, footwear and motorcycles.
Ford, one of the country’s prominent conservative politicians, enacted the electricity tariffs amid widespread outrage in Canada over Trump repeatedly suggesting that the U.S. should annex Canada. Ford said March 11 that while he wanted to maintain electricity flows to the U.S., he would not hesitate to cut off exports if Trump continued the trade war.
“Is it a tool in our toolkit? 100%,” Ford said in an interview with CNBC. “And as he continues to hurt Canadian families, Ontario families, I won’t hesitate to do that. That’s the last thing I want to do.”
Trump already declared a nationwide energy emergency his first day in office, opening the possibility of using special and little-used subsidies in federal law in new ways to propel the construction of pipelines, power lines and other projects.
