Trump Retracts Threatened Tariff Increase on Canadian Steel and Aluminum
U.S. President Donald Trump initially announces a doubling of tariffs on Canadian exports before reversing course after diplomatic discussions.
On Tuesday, relations between Canada and the United States faced renewed tension when U.S. President Donald Trump threatened to double tariffs on Canadian steel and aluminum imports, increasing the rates from 25% to 50%.
This announcement came through Trump's social media platform ahead of the expected implementation of these tariffs, scheduled for Wednesday.
The proposed tariff hike was a reaction to Ontario's decision to impose a surcharge on electricity exports to three U.S. states.
However, after a phone call between Ontario Premier Doug Ford and U.S. Secretary of Commerce Howard Lutnick, Trump altered his stance, expressing respect for Ford's decision to reconsider the electricity surcharge.
During a press briefing, Trump stated, “There is someone very strong in Canada who announced they would impose a surcharge on electricity...
That would have been a very bad thing, and they are not going to do it; I respect that.” Subsequently, he suggested that he might also reconsider the potential tariff increase.
Peter Navarro, the President's trade advisor, confirmed the shift in Trump's position, stating that tariffs would not be raised to 50%.
Ford also indicated plans to align Ontario's electricity policies with ongoing discussions and confirmed he would meet with Lutnick on Thursday in Washington.
The tariffs in question, which do not include exemptions, would significantly impact multiple sectors, including electronics, automotive, and construction.
Canada stands to be the most affected, given its historical alliance with the U.S. and its role as a trade partner under the United States-Mexico-Canada Agreement (USMCA).
According to consultancy firm EY-Parthenon, Canada accounts for 50% of U.S. aluminum imports and 20% of steel imports.
Mark Carney, the incoming Prime Minister of Canada, asserted that Canada’s response to U.S. trade policies would aim for maximum impact on the U.S. while minimizing repercussions for Canada.
Carney previously stated, “Canada will never be part of the United States,” adopting a firm stance against U.S. trade measures.
Trump, however, maintained his criticism of what he termed “horrendous Canadian tariffs” and warned of potential automobile import tariffs beginning April 2, which he claimed could jeopardize Canada's automotive manufacturing industry.
He further suggested that Canada should consider statehood, claiming it would eliminate tariffs altogether and provide enhanced security against issues like drug trafficking.
In the wake of Trump's tariff threats, reactions have varied significantly.
Some U.S. manufacturers, like Drew Greenblatt of Marlin Steel in Baltimore, expressed satisfaction with the current tariffs, citing increased orders for products made from domestic steel.
Conversely, concerns have been raised about the broader economic impacts of increased import costs, with one major U.S. steel manufacturer indicating domestic steel prices would rise in response to imported product costs.
Economists have also voiced apprehension regarding the inflationary effects that Trump's tariff policies may provoke, suggesting that the potential price increases on a range of consumer goods could contribute to rising inflation rates in the U.S.
This announcement came through Trump's social media platform ahead of the expected implementation of these tariffs, scheduled for Wednesday.
The proposed tariff hike was a reaction to Ontario's decision to impose a surcharge on electricity exports to three U.S. states.
However, after a phone call between Ontario Premier Doug Ford and U.S. Secretary of Commerce Howard Lutnick, Trump altered his stance, expressing respect for Ford's decision to reconsider the electricity surcharge.
During a press briefing, Trump stated, “There is someone very strong in Canada who announced they would impose a surcharge on electricity...
That would have been a very bad thing, and they are not going to do it; I respect that.” Subsequently, he suggested that he might also reconsider the potential tariff increase.
Peter Navarro, the President's trade advisor, confirmed the shift in Trump's position, stating that tariffs would not be raised to 50%.
Ford also indicated plans to align Ontario's electricity policies with ongoing discussions and confirmed he would meet with Lutnick on Thursday in Washington.
The tariffs in question, which do not include exemptions, would significantly impact multiple sectors, including electronics, automotive, and construction.
Canada stands to be the most affected, given its historical alliance with the U.S. and its role as a trade partner under the United States-Mexico-Canada Agreement (USMCA).
According to consultancy firm EY-Parthenon, Canada accounts for 50% of U.S. aluminum imports and 20% of steel imports.
Mark Carney, the incoming Prime Minister of Canada, asserted that Canada’s response to U.S. trade policies would aim for maximum impact on the U.S. while minimizing repercussions for Canada.
Carney previously stated, “Canada will never be part of the United States,” adopting a firm stance against U.S. trade measures.
Trump, however, maintained his criticism of what he termed “horrendous Canadian tariffs” and warned of potential automobile import tariffs beginning April 2, which he claimed could jeopardize Canada's automotive manufacturing industry.
He further suggested that Canada should consider statehood, claiming it would eliminate tariffs altogether and provide enhanced security against issues like drug trafficking.
In the wake of Trump's tariff threats, reactions have varied significantly.
Some U.S. manufacturers, like Drew Greenblatt of Marlin Steel in Baltimore, expressed satisfaction with the current tariffs, citing increased orders for products made from domestic steel.
Conversely, concerns have been raised about the broader economic impacts of increased import costs, with one major U.S. steel manufacturer indicating domestic steel prices would rise in response to imported product costs.
Economists have also voiced apprehension regarding the inflationary effects that Trump's tariff policies may provoke, suggesting that the potential price increases on a range of consumer goods could contribute to rising inflation rates in the U.S.
