Trump reverses course on additional 25% tariff on Canadian steel and aluminum
President Donald Trump on Tuesday backed down from a threat to impose an additional 25% in tariffs on Canadian steel and aluminum products -- on top of a 25% tariff already set to go into effect on Wednesday.
The reversal came after an agreement announced by Ontario Premier Doug Ford and U.S Commerce Secretary Howard Lutnick to suspend a planned 25% surcharge on electricity from Ontario sent to U.S. customers that Ford had warned he would impose.
Ford issued a joint statement with Lutnick on X announcing the suspension of the 25% electricity surcharge.
The withdrawal of the surcharge came alongside an agreement to hold a meeting at the White House on Thursday to discuss a renewal of the trade agreement between the U.S. and Canada, the statement said.
Trump's announcement that he would double tariffs on Canadian steel and aluminum came after Ford threatened the electricity surcharge.
Even with the new deal, the original 25% tariffs on steel and aluminum imports from all countries will still go into effect on Wednesday as planned, according to White House spokesman Kush Desai. The U.S. imports more steel and aluminum from Canada than any other country.
The developments Tuesday marked a slight deescalation in a budding trade war between the U.S. and Canada after the U.S. imposed 25% tariffs on imports from Canada. In a near-immediate response, Canada slapped a 25% retaliatory tariff on $30 billion worth of goods. Tariffs on an additional $125 billion worth of products will take effect in 21 days, then-Prime Minister Justin Trudeau said
Trudeau sharply criticized the tariffs, calling them a "dumb" policy that does not "make sense."
Earlier Tuesday before the apparent deal had been struck, both Ford and Trump continued to strike more combative tones.
"That's the last thing I want to do," Ford told CNBC. "I want to send more electricity down to the U.S., to our closest allies."
"Is it a tool in our toolkit? 100%. And as [Trump] continues to hurt Canadian families, Ontario families, I won't hesitate to do that," Ford continued.
Earlier Tuesday, a spokesperson for Canada's incoming Prime Minister Mark Carney described Trump's latest tariffs as an "attack on Canadian workers, families and businesses."
"My government will keep our tariffs on until the Americans show us respect and make credible, reliable commitments to free and fair trade," the spokesperson added in a statement to ABC News.
Speaking at the White House on Tuesday, Press Secretary Karoline Leavitt said Trump had not spoken with Carney since he became the designated prime minister on Sunday.
"Certainly [Trump's] phone is always open to leaders who want to speak with him," Leavitt said.
When asked if the U.S. still considers Canada a close ally, Leavitt responded, "They have always been an ally. Perhaps they’ve become a competitor now."
Trump also said in his post that he will "shortly be declaring a National Emergency on Electricity" in the area impacted by the tariffs from Canada. He said that the national emergency will "allow the U.S to quickly do what has to be done" to respond to the tariff from Canada, without providing any specifics on what actions the U.S. might take.
Earlier Tuesday, Ford urged Trump to reconsider his tariffs, saying that they are "causing chaos."
"Markets are tanking. He needs to drop his tariffs and come to the table to negotiate a fair trade deal. Until he does, we won’t back down," Ford said in a post on X.
The tit-for-tat measures between the U.S. and Canada reignited a trade war that had been averted a month earlier, when Trump paused the implementation of tariffs after reaching an agreement with Canada on border enforcement.
In late February, Trump alleged that illicit drugs such as fentanyl had continued to enter the U.S. through Canada, despite the agreements reached weeks earlier to address the issue.
Since September, nearly all fentanyl seized by the U.S. came through the Southern border with Mexico, according to the U.S. Customs and Border Patrol (CBP) agency. Less than 1% of fentanyl was seized at the northern border with Canada, the CBP found.
The reason for the tariffs is based on a false allegation about Canada as a major source of drugs entering the U.S., Trudeau said last week.
As part of his announcement on Tuesday promising to double the tariffs on Canadian steel and aluminum imports, Trump threatened to impose additional retaliatory tariffs on Canada if duties on U.S. goods remain in place.
"If other egregious, long time Tariffs are not likewise dropped by Canada, I will substantially increase, on April 2nd, the Tariffs on Cars coming into the U.S. which will, essentially, permanently shut down the automobile manufacturing business in Canada," Trump said in the Truth Social post.
He also called on Canada to drop their tariffs on dairy farmers, and again asserted that Canada should become America's 51st state.
"The artificial line of separation drawn many years ago will finally disappear, and we will have the safest and most beautiful Nation anywhere in the World – And your brilliant anthem, “O Canada,” will continue to play, but now representing a GREAT and POWERFUL STATE within the greatest Nation that the World has ever seen!," Trump said in the post.
ABC News' William Gretsky, Justin Fishel and Zunaira Zaki contributed to this report.
