Trump Backs Off Doubling Tariffs on Canadian Steel & Aluminum After High-Stakes Trade Standoff

 

In a dramatic turnaround, the Trump administration has rescinded its threat to double tariffs on Canadian steel and aluminum after Ontario dropped plans to impose a surtax on U.S.-bound electricity. The move comes after a rollercoaster day on Wall Street, where investors were rattled by the ongoing uncertainty in trade policy.

Trump’s Tough Talk & Sudden Reversal

Earlier in the day, President Donald Trump had vowed to hike tariffs on Canadian metals from 25% to 50% in response to Ontario’s retaliatory tax on electricity exports to the U.S. Canada, as America’s largest foreign supplier of steel and aluminum, found itself once again in Trump’s crosshairs.

But by the afternoon, Ontario Premier Doug Ford brokered a deal with U.S. Commerce Secretary Howard Lutnick. The agreement saw Ontario scrap the electricity surcharge in exchange for Trump backing down on his tariff escalation. Additionally, Ford secured a high-level meeting with U.S. Trade Representative Jamieson Greer on Thursday to negotiate a new U.S.-Mexico-Canada trade pact.

“I’m not out to hurt the American people,” Ford said. “Sometimes you have to play your cards, and this was one of them. Hopefully, this leads to a constructive conversation.”

Trump’s Trade War Escalation & Canada’s Defiant Response

Trump didn’t stop at steel and aluminum—he also warned of broader economic consequences for Canada. In a fiery post on Truth Social, he threatened to impose tariffs on Canadian automobiles, a move he claimed would "permanently shut down the automobile manufacturing business in Canada."

His aggressive stance has led to heightened concerns among Canadian officials, especially as Trump has made offhanded remarks about annexing Canada as the U.S.’s 51st state. Prime Minister-designate Mark Carney called Trump’s actions an attack on Canadian households and businesses, vowing to maintain Canada’s retaliatory tariffs unless the U.S. showed “respect” in trade negotiations.

Ford, for his part, didn’t shy away from countermeasures, stating he was prepared to cut off electricity exports to key U.S. states like New York, Michigan, and Minnesota—impacting 1.5 million American households and businesses—if Trump escalated the dispute.

Stock Market Chaos & Economic Uncertainty

The trade tensions sent shockwaves through financial markets, with major indexes tumbling. The Dow Jones Industrial Average fell 1.1%, the S&P 500 dropped 0.8%, and the Nasdaq Composite slid 0.2%, marking the worst two-day slump since August.

White House spokesperson Karoline Leavitt attempted to downplay the turmoil, blaming economic “transitions” from the Biden era for the instability. However, Trump’s unpredictability on trade has left investors and businesses scrambling for clarity.

No Exceptions, But Some Loopholes?

The Trump administration has maintained that the 25% steel and aluminum tariffs will go into full effect at midnight on March 12, with no exemptions for Canada or other trading partners. In the past, Trump negotiated exclusions for allies like Japan, Australia, the EU, and Mexico—but this time, his team insists there will be no carve-outs.

Still, Trump has hinted at possible flexibility. He recently suggested Australia might be exempt after speaking with Prime Minister Anthony Albanese, and a last-minute one-month reprieve for certain Canada-Mexico tariffs has fueled speculation that additional adjustments may be coming.

What’s Next?

With tensions running high, all eyes are on Thursday’s meeting between Ford and U.S. trade officials. The stakes are massive—Trump’s escalating tariff threats could send shockwaves through North America’s economy, while Canada’s willingness to retaliate shows that it won’t back down easily.

Will Trump push forward with his protectionist agenda, or will economic realities force a more diplomatic approach? For now, businesses, investors, and policymakers are bracing for whatever comes next in this high-stakes trade chess match.