Trump caps wild day, reversing threat to double tariffs on Canadian steel

President Donald Trump said Tuesday that he had ordered a doubling of the tariff on Canadian steel and aluminum, setting off a new wave of selling on Wall Street and raising fears that his insistence on overhauling the global trading system may involve significant costs.

Then a few hours later, after financial markets convulsed, he told reporters he “probably” would not double down on the industrial metals tax after all.

Trump’s initial midmorning threat came in response to Ontario Premier Doug Ford’s imposition of a new surcharge on Canadian electricity supplied to three U.S. states. But Ford’s action was itself a response to Trump’s announcement last month of tariffs on foreign steel and aluminum, which are scheduled to take effect at 12:01 a.m. Wednesday and could cost Canada significant U.S. sales.

By day’s end, it was not clear what the whiplash-inducing diplomacy had accomplished, other than to showcase the unpredictable character of Trump’s policymaking. It began with the president venting on social media and ended with one of his closest White House trade advisers confirming the retreat to the status quo.

“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. This will go into effect TOMORROW MORNING, March 12th,” the president posted on his social media site, Truth Social.

Despite Trump’s claim, Canada’s average tariff rate of 3.8% is little different from the United States’ 3.3% mark, according to a World Trade Organization database.

On Tuesday afternoon, the North American standoff took another turn, when Ford announced that he was suspending the planned electricity surcharge, and Commerce Secretary Howard Lutnick said he would meet with the Canadian official on Thursday to discuss a “renewed” North American trade relationship.

Within the hour, Trump told reporters that, following Ford’s decision, he would reconsider the higher tariffs on Canadian steel and aluminum. Peter Navarro, the president’s trade consigliere, subsequently confirmed to CNBC that the supersize tariffs would not take effect after all.

The president’s abrupt trade war escalation, meanwhile, renewed selling pressure on Wall Street, where the S&P 500 lost nearly 1% after swinging wildly for most of the day. The market measure has lost more than 8% of its value in the past month, as the president repeatedly shifted his tariff plans even as stocks rose on most European exchanges.

The financial market tumult only added to concerns about the state of the economy. Fewer small-business owners expect conditions to improve in the next three months or plan to create new jobs, according to the National Federation of Independent Business monthly survey released Tuesday.

That report came amid mounting fears of the first recession in five years, following the president’s refusal to rule out a downturn in a recent televised interview.

Economists at JPMorgan on Friday raised their recession forecast to a 40% probability this year, up from 30% at the start of 2025.

Trump’s 25% steel and aluminum tariffs reprise similar actions he took during his first term and are intended to encourage greater domestic production and employment. The president has ruled out – at least so far – granting any of the exemptions that he permitted last time, which industry groups say undermined the protection they were promised.

But companies that use the industrial metals will face higher prices. Heliene, a solar manufacturer in Mountain Iron, Minnesota, buys aluminum for the panel frames from a Wisconsin supplier. As tariffs push up the cost of foreign alternatives, domestic producers raise their prices as well.

“The moment there is an import duty, the domestic price goes up,” said Martin Pochtaruk, Heliene’s CEO.

Heliene has received an invoice for an aluminum shipment in May, which includes a 25% price increase.

The company plans to pass along the higher cost to the independent power producers that buy its gear.

Tuesday’s tariff drama began with the president’s Truth Social manifesto.

Without providing any details, Trump said he would soon declare a “National Emergency on Electricity within the threatened area,” an apparent reference to portions of Minnesota, Michigan and New York, which depend on Ontario for some electricity supplies.

He issued a separate demand for Canada to drop its existing tariffs on imports from the United States of agricultural products, and he repeated his insistence that Canada “become our cherished Fifty First State.”

Trump also threatened to impose steep tariffs on Canadian cars starting April 2, which he vowed would “permanently shut down the automobile manufacturing business in Canada.”

Mark Carney, Canada’s next prime minister, called Trump’s tariffs “an attack on Canadian workers, families and businesses” and said his government’s response will have “maximum impact in the U.S. and minimal impact here in Canada, while supporting the workers impacted.”

“My government will keep our tariffs on until the Americans show us respect and make credible, reliable commitments to free and fair trade,” he wrote in a post on the social media site X.

In an interview with MSNBC on Tuesday, Ontario’s premier called on Trump to “stop the chaos.” He had previously threatened to cut off Ontario’s electricity supplies to the United States if tariffs are not lifted. “We will not back down,” Ford said. “We will be relentless.”

While Trump and Justin Trudeau, Canada’s outgoing prime minister, long had a contentious relationship, the president’s dustup with Ford was ironic. The two share a taste for performative machismo. During the recent provincial election campaign in Ontario, Ford was caught on a hot mic telling several firefighters that he had wanted Trump to win the 2024 election.

“On Election Day, was I happy this guy won? One hundred percent I was. Then the guy pulled out the knife and f—-ing yanked it into us,” he said, making a stabbing motion with his hand.

In 2024, Canada – the top supplier of foreign steel to the United States – sent nearly 7 million tons of steel to American customers, according to the American Iron and Steel Institute. Brazil, Mexico, South Korea and Vietnam rounded out the top five import sources.

The International Association of Machinists and Aerospace Workers’ leadership assailed Trump’s deepening trade brawl. In a joint statement, Brian Bryant, the union’s international president, and David Chartrand, its top Canadian official, called for deepening links between the United States and Canada.

“The Trump administration’s erratic approach to tariffs is wreaking havoc on workers and businesses in the United States and Canada. This reckless trade policy creates unnecessary economic uncertainty, threatens good-paying jobs, and disrupts industries that rely on a stable and cooperative North American supply chain,” the union executives said. “The IAM Union calls for an immediate and permanent end to these damaging tariffs. Canada is not an adversary – it is one of our closest allies and largest trading partners.”