Donald Trump has backed down from plans to double US tariffs on Canadian steel and metal imports to 50 per cent just hours after first threatening the levies, rattling investors by intensifying the North American trade war.
The move by the president comes after the Canadian province of Ontario earlier in the day suspended its own surcharge of 25 per cent on exports of power to the US, which Trump had cited as a reason for boosting tariffs on imports from Canada.
The reversal marks a swift de-escalation of unprecedented trade warfare between the world’s largest economy and one of its three largest trading partners, and marks the second consecutive week in which Trump has softened planned tariffs on Canada.
The US would still impose tariffs of 25 per cent on Canadian steel and aluminium imports from midnight, the White House confirmed, as part of broader tariffs on all steel and aluminium imports.
In a statement released late on Tuesday, hours after Trump announced he would issue tariffs of 50 per cent on the Canadian metals, the White House said the president had “once again used the American economy . . . to deliver a win for the American people”.
Ontario premier Doug Ford said earlier on Tuesday afternoon that he would suspend the 25 per cent surcharge following a “productive” conversation with US commerce secretary Howard Lutnick.
Ford said he would meet Lutnick and US trade representative Jamieson Greer in Washington later this week to discuss the trade tensions.
The premier’s U-turn was announced just a day after the surcharge was imposed, and came hours after Trump said the US would impose 50 per cent tariffs on Canadian steel and aluminium on Wednesday.
“I have instructed my Secretary of Commerce to add an ADDITIONAL 25% Tariff, to 50%, on all STEEL and ALUMINUM COMING INTO THE UNITED STATES FROM CANADA, ONE OF THE HIGHEST TARIFFING NATIONS ANYWHERE IN THE WORLD,” the US president wrote on his Truth Social platform on Tuesday morning.
The latest trade dispute sparked a further increase in volatility on Wall Street, briefly sending the US S&P 500 index sharply lower on Tuesday following a heavy sell-off the previous day. The S&P closed 0.8 per cent lower, cutting some of its losses.
Shortly after his inauguration, Trump said he would impose 25 per cent tariffs on Canada and Mexico, but last week he granted a one-month reprieve for goods that met the rules of a 2020 free trade deal.
The aluminium and steel tariffs are part of a separate set of duties to be imposed on producers across the world, which is due to take force on Wednesday.
White House officials said the global 25 per cent tariffs on imports of the metals were intended to protect US domestic industry.
Mark Carney, Canada’s incoming prime minister, described Trump’s latest escalation as “an attack on Canadian workers, families, and businesses”.
Carney added that his government would “ensure our response has maximum impact in the US and minimal impact here in Canada”.
The White House on Tuesday continued to dismiss widespread concerns over the market turmoil.
“When it comes to the stock market, the numbers that we see today, the numbers we saw yesterday . . . are a snapshot of a moment of time,” said press secretary Karoline Leavitt.
“We are in a period of economic transition,” she added.
A closely tracked measure of the difference in US and London aluminium prices, called the Midwest premium, rose sharply on Tuesday, underscoring the rising costs facing American industrial groups.
Futures tracking the premium, which follows prices of the metal delivered to plants in the US Midwest, rose as much as 18 per cent, according to FactSet data.
Trump said that if Canada did not drop its “long time” tariffs, he would “substantially increase” levies on cars coming into the US, a move he said would “essentially, permanently shut down” the country’s carmaking industry.
The president, who also suggested the US’s northern neighbour could no longer be assured that Washington would protect it militarily, added that “the only thing that makes sense is for Canada to become our cherished Fifty First State. This would make all Tariffs, and everything else, totally disappear.”
Canada has strongly rejected such suggestions by Trump since his inauguration in January.
Additional reporting by Steff Chávez in Washington
