White House walks back doubling of steel and aluminum tariffs as Ontario relents on electricity levy after tit-for-tat day<\/p>\n\n\n\n
The looming trade war between the US and Canada<\/a> escalated on Tuesday as Donald Trump<\/a> threatened to double tariffs<\/a> on Canadian steel and aluminum after Canadian threats to increase electricity prices for US customers.<\/p>\n\n\n\n On Tuesday morning Trump<\/a> announced plans to double tariffs<\/a> on Canadian steel and aluminum from 25% to 50% and once again threatened to annex Canada as retaliation for the province of Ontario\u2019s imposition of a 25% surcharge<\/a> on electricity exports to several US states, in a dramatic escalation of the trade war between the two ostensibly allied countries.<\/p>\n\n\n\n The news set off another stock market sell-off on Wall Street<\/a> that was tempered when Ontario\u2019s premier, Doug Ford, said he made a deal with the US commerce secretary, Howard Lutnick, to suspend Canada\u2019s 25% tariff on exports of electricity to Michigan, New York and Minnesota after Lutnick agreed to discuss renewing existing trade relations.<\/p>\n\n\n\n New tariffs of 25% on all imported steel and aluminum are still scheduled to take effect at midnight on Wednesday, including against allies and top US suppliers Canada<\/a> and Mexico, the White House confirmed to Reuters.<\/p>\n\n\n\n Incorrectly calling Canada \u201cone of the highest tariffing nations anywhere in the world\u201d, Trump said he had instructed his secretary of commerce to increase levies on the metals due to start on Wednesday morning. He also threatened more tariffs on 2 April on the car industry that would \u201cessentially, permanently shut down the automobile manufacturing business in Canada\u201d.<\/p>\n\n\n\n Asking rhetorically why the US received electricity from another country, he accused Canada of using energy, \u201cthat so affects the life of innocent people, as a bargaining chip and threat\u201d and said \u201cthey will pay a financial price for this so big that it will be read about in History Books for many years to come\u201d.<\/p>\n\n\n\n Mark Carney, Canada\u2019s incoming prime minister, called<\/a> Trump\u2019s latest move \u201can attack on Canadian workers, families and businesses\u201d and promised to \u201ckeep our tariffs on until the Americans show us respect and make credible, reliable commitments to free and fair trade\u201d.<\/p>\n\n\n\n The Trump administration<\/a> was also reportedly preparing on Tuesday to institute a new rule that would require some Canadians staying in the US for more than 30 days to register personal information and agree to fingerprinting<\/a>, according to Bloomberg. Currently there is largely frictionless travel for citizens between the two countries.<\/p>\n\n\n\n The fractious economic battle between the US and Canada has developed even graver undertones as Trump makes increasingly aggressive threats for the US to absorb its northern neighbour. Although at first claiming that he wanted Canada to crack down on fentanyl, Trump has now accused the US ally of underpaying for military protection and incorrectly described the trade imbalance with Canada as a $200bn subsidy from the US.<\/p>\n\n\n\n Trump coupled his tariff declaration with openly aggressive language about making Canada \u201cour cherished Fifty First State\u201d, repeating a constant refrain over the last few months. He claimed American statehood for Canada would make \u201call tariffs, and everything else, totally disappear\u201d, called the border \u201can artificial line of separation drawn many years ago\u201d and suggested the Canadian national anthem, O Canada, would become a state anthem.<\/p>\n\n\n\n The rhetoric has inspired a rare unity among Canadian politicians, with Carney campaigning for Liberal leader on standing up to Trump, and saying to a standing ovation in his acceptance speech on Sunday that \u201cCanada never, ever will be part of America<\/a>\u201d.<\/p>\n\n\n\n Trump\u2019s moves are just the latest in the chaos around the president\u2019s trade policy, amid tumbling stock markets and fears it could trigger a possible US recession.<\/p>\n\n\n\n The White House\u2019s strategy so far has been to play down<\/a> the anxiety on Wall Street, even as stocks waver. After Trump refused<\/a> to rule out the possibility of a recession in an interview with Fox News over the weekend, the Nasdaq had its worst day<\/a> on Monday since September 2022, dropping 4%.<\/p>\n\n\n\n Shares in US automakers also fell after the announcement, as traders bet that high metal tariffs would drive up costs for the American industrial sector, eating into their profits. Ford Motor dropped nearly 4%, while General Motors dipped by 1.3%. Shares in the carmaker Stellantis \u2013 which has several manufacturing facilities in Canada \u2013 fell by more than 5%.<\/p>\n\n\n\n Price premiums for aluminum on US physical market soared to a record high above $990 a metric ton, Reuters reported.<\/p>\n\n\n\n The Ontario premier Ford has said that Trump must take the blame if there is a recession in the US, telling<\/a> MSNBC on Tuesday: \u201cIf we go into a recession, it will be called the Trump recession.\u201d<\/p>\n\n\n\n Ford has said in the past that he would be willing to cut off US energy supply from Canada completely in response to Trump\u2019s tariffs.<\/p>\n\n\n\n \u201cWe will be relentless,\u201d Ford said, adding he would not \u201chesitate\u201d to shut off electricity exports to the US if Trump continues the trade war. Ford also encouraged American CEOs, who have been largely silent on the trade war and threats to Canadian sovereignty, to speak up. On Tuesday Trump is set to meet with the Business Roundtable, an influential group of business leaders that includes the CEOs of Google, Amazon and JPMorgan.<\/p>\n\n\n\n Ford said: \u201cWe need those CEOs to actually get a backbone and stand in front of him and tell him, \u2018This is going to be a disaster. It\u2019s mass chaos right now.\u2019\u201d<\/p>\n\n\n\n The group said in a statement<\/a> last week that while it supported trade policies that \u201copen markets to US exports, revitalize the domestic manufacturing base and de-risk supply chains\u201d, it called on the White House to \u201cpreserve the benefits\u201d of the US-Mexico-Canada Agreement (USMCA), which Trump himself signed in 2020 but has since apparently violated by suddenly imposing steep tariffs on both countries.<\/p>\n\n\n\n Tariffs of 25% on steel and aluminum imports were already slated to apply to all countries globally on Wednesday, after Trump announced them last month.<\/p>\n\n\n\n Both consumer and business confidence has dropped in the US since Trump entered office.<\/p>\n\n\n\n A survey<\/a> published on Monday in Chief Executive magazine found that CEOs\u2019 rating of the current business climate fell 20% in January, from 6.3 out of 10 \u2013 with 1 being \u201cpoor\u201d and 10 being \u201cexcellent\u201d \u2013 to 5, the lowest since spring 2020. Trump had not yet spoken with Carney, said the White House press secretary Karoline Leavitt on Tuesday, arguing that the tariffs on Canadian metals \u201cwas a retaliatory statement due to the escalation of rhetoric that we\u2019ve seen out of Ontario, Canada\u201d.<\/p>\n\n\n\n \u201cI think Canada is a neighbor. They are a partner. They have always been an ally,\u201d she said, adding: \u201cPerhaps they are becoming a competitor now.\u201d<\/p>\n\n\n\n
\u201cThat\u2019s the last thing I want to do. I want to send more electricity down to the US, to our closest allies or our best neighbors in the world. I want to send more electricity.\u201d But, he said, \u201cIs it a tool in our toolkit? One hundred per cent, and as he continues to hurt Canadian families, Ontario families, I won\u2019t hesitate to do that.\u201d<\/p>\n\n\n\n
Meanwhile, consumer confidence measured by the Conference Board found that confidence dropped<\/a> over 6% in February, its biggest month-to-month drop since August 2021.<\/p>\n\n\n\n