Trump reverses new tariffs threat on Canada as Ontario rescinds electricity charges

President Donald Trump backed down from an unusual trade war escalation on Tuesday, which promised a significant increase in duties on Canadian steel and aluminum, as well as new levies on Canadian energy. In turn, Ontario suspended power fees for US consumers.

Following the back-and-forth tariff threats that pushed markets dramatically lower for a second day on Tuesday, US Commerce Secretary Howard Lutnick and Ontario Premier Doug Ford announced a meeting Thursday to renegotiate the USMCA free trade agreement.

The trade war began after President Trump imposed 25% tariffs on steel and aluminum imports from Canada.

"Today, United States Secretary of Commerce @howardlutnick and Premier of Ontario Doug Ford had a productive conversation about the economic relationship between the United States and Canada," Ford's account said in a post to X. "Secretary Lutnick agreed to officially meet with Premier Ford in Washington on Thursday, March 13 alongside the United States Trade Representative to discuss a renewed USMCA ahead of the April 2 reciprocal tariff deadline. In response, Ontario agreed to suspend its 25 per cent surcharge on exports of electricity to Michigan, New York and Minnesota."

Markets originally plunged strongly following Trump's Truth Social post revealing his 50% tariff threat on Canadian aluminum and steel, but recovered after the combined Lutnick-Ford statement. The Dow recovered some of its losses but continued to fall after Trump remarked outside the White House on Tuesday that he didn't care about the stock market.

On Tuesday morning, Mr. Trump said that he would double the tariff on all steel and aluminum imports beginning Wednesday, citing Ontario's power fee as the cause for the price increase.

"Based on Ontario, Canada, placing a 25% Tariff on 'Electricity' coming into the United States, 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 president wrote on Truth Social Tuesday morning.

The president also urged Canada to remove tariffs on different U.S. dairy goods and said that he will declare a "national emergency on electricity" in areas affected by Canada's surcharge. Ontario's fee targeted New York, Minnesota, and Michigan, which share a border with Canada.

The president again restated his desire for Canada to join the United States' 51st state, a notion that Canadians oppose, implying that if they agree, they will not suffer tariffs.

"The only thing that makes sense is for Canada to become our cherished Fifty First State," Mr. Trump wrote.  "This would make all Tariffs, and everything else, totally disappear. Canadians taxes will be very substantially reduced, they will be more secure, militarily and otherwise, than ever before, there would no longer be a Northern Border problem, and the greatest and most powerful nation in the World will be bigger, better and stronger than ever — And Canada will be a big part of that."