Donald Trump has suspended plans to double U.S. tariffs on Canada’s steel and metal imports. A few hours after the first threat.
The 25% tariff was still ahead and came into effect on Wednesday.
The president’s move comes after Ontario, Canada, halted new charges of 25% of the electricity it sends to several northern U.S. provinces of Ontario, hours after Trump threatened to spike country tariffs sharply.
It marked the latest skirmish in the trade war that puts two North American neighbors at risk of economic damage.
“The cooler head won,” Trump’s trade adviser Peter Navarro told broadcaster CNBC, confirming that Trump will not advance his latest tariff threat.
Canada, one of America’s closest trading partners, was born into the brunt of Trump’s rage as he launched a trade war in the first few months of his inauguration.
Trump, along with Mexico, struck goods from the country with Mexico at a 25% tariff, but he signed an order temporarily exempts a significant number of items from his new obligation.
Canada is also facing 25% tariffs on steel and aluminum, due to take effect Wednesday after President Trump said he has ended the exemption from obligations granted to several countries.
Canada has announced retaliation, calling Trump’s attack an unfair attack. This includes new tariffs of $300 billion ($220 billion, £16 billion) on US products.
Ford had announced that he would tax the US electricity exports to remove these tariffs.
He also said that if the US “escalates”, it would “not hesitate to shut off electricity completely.”
Announcing the decision to suspend its electricity obligations, Ford said he thought it was the “right decision” to focus on the wider North American debate on free trade transactions.
“In the negotiations we have, there’s a point where both parties need to warm up and temperatures drop,” he said.
“They understand how serious we are,” he added. “We both agreed. The cooler head wins. We need to sit down and move this forward.”
In his social media post, which threatened to double Canadian steel and aluminum collections, Trump said he was in response to Ford’s move.
He also criticized Canada for relying on the United States for “military protection,” and reiterated that he wanted the country to become the 51st state.
He added that if Canada joins the US as a US, “all tariffs and everything else will disappear completely.”
The White House declared the episode a victory in a statement that Trump “renews the leverage of the world’s highest and largest American economy to bring victory to Americans.”
Customs duties are taxes charged on goods imported from other countries.
Companies that bring foreign countries to the country pay taxes to the government.
The days before and after came to turbulence for the market.
The S&P 500 Index, the largest company listed in the US, fell 2.7% on Monday, before falling another 0.7% on Tuesday.
The UK’s FTSE 100 share index, which rose to the bottom early on Tuesday, fell further, following Trump’s latest comments, closing more than 1%. The French CAC 40 index and the German DAX followed a similar pattern.
When asked whether the US was heading for a recession, stock market sales began on Monday after Trump said the economy was “transitioning.”
Investors are concerned about the economic impact of Trump’s trade policy, and while uncertainty leads to economic paralysis, it is feared that it could boost inflation in the US and beyond.
Even before comments on Tuesday, Trump’s tariffs had already raised concerns for American businesses.
On Monday, Jason Goldstein, founder of Icarus Brewing, a small New Jersey beer maker, has hired 50 people, but the previous tariff announcements have prompted many emails from suppliers.
They warn that all prices from grain and aluminum cans are rising.
Goldstein has replenished his month-long can supply and is refraining from new purchases as a result of uncertainty and rapidly changing circumstances.
“It’s definitely a worrying time for us,” he said.
“I’ve never read any news I’ve ever read before in my life.
