U.S. President Donald Trump has decided to abandon his proposal to double tariffs [1] on Canadian steel and aluminum imports. The initial plan, which would have raised tariffs from 25% to 50%, was announced as a response to Ontario’s decision to impose a 25% surcharge on electricity exports to the United States. The move had sparked concerns of a deepening trade rift between the two neighboring nations.
Peter Navarro, Trump’s trade adviser, told CNBC “Cooler heads prevailed”, confirming that Trump has decided to halt his plan to double tariffs
The announcement of the tariff hike sent shockwaves through markets, with analysts warning of potential economic fallout for industries reliant on cross-border trade. Canadian officials, including outgoing Prime Minister Justin Trudeau, expressed strong opposition to the proposed increase, emphasizing the importance of maintaining stable trade relations between the two countries.
However, the situation took a turn when Ontario Premier Doug Ford engaged in discussions with U.S. Commerce Secretary Howard Lutnick. Following these talks, Ford agreed to suspend the electricity surcharge, a gesture that appeared to pave the way for a resolution. However, Ford had also previously said he would “not hesitate to shut off electricity completely” if the US “escalates”. In light of this development, Trump decided to retract his plan to double the tariffs, though the existing 25% tariffs on Canadian metals remain firmly in place.
The decision has elicited mixed reactions from various quarters. Some view it as a pragmatic step to avoid further escalation of trade tensions, while others see it as a temporary reprieve in an ongoing and unpredictable trade dispute. Canadian officials have reiterated their commitment to defending the interests of their industries and workers, warning that any future tariff increases would be met with a robust response.
The volatile nature of U.S-Canada trade relations under the Trump administration has left the global trade grappling with uncertainty, as the specter of further trade disputes looms large.
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[1] Trump halts plan for 50% steel and aluminium tariffs on Canada https://www.bbc.com/news/articles/cm2y811g1dgo