Canada backed down after President Donald Trump warned that the country would face an unprecedented "financial price" for the electricity tariff it had imposed on the US. Just hours later, Ontario Premier Doug Ford announced that he would revoke the 25% tariff on Canadian electricity exports to Michigan, New York, and Minnesota, which he had slapped on Monday.
The tariff was initially introduced as a retaliatory measure against earlier tariffs imposed by Trump, as trade tensions between the two nations escalated. The Premier said he spoke with Commerce Secretary Howard Lutnick regarding the issue, and they agreed to meet on Thursday to discuss reciprocal tariffs that Trump plans to implement.
Trump Has the Last Laugh
"In response, Ontario agreed to suspend its 25 per cent surcharge on exports of electricity to Michigan, New York and Minnesota," Ford said. In response, Trump agreed to keep tariffs on Canadian steel and aluminum at 25% instead of doubling them to 50%.
He also reiterated his call for Canada to align with the United States. "Canada should honestly become our 51st state. we wouldn't have a northern border problem. We wouldn't have a tariff problem," Trump added.
"Canada would be great as our cherished 51st state. You wouldn't have border problems. You wouldn't have anything."
Earlier on Tuesday, Trump declared a national emergency regarding electricity in the United States and increased tariffs on Canadian aluminum and steel to double their previous rate after Ford implemented the electricity tariff.
In a detailed post on his Truth Social account, the president also warned that he might "permanently shut down" Canada's auto industry.
Amid the escalating tariff dispute, the stock market plunged by over 500 points as concerned investors feared a possible recession. When asked about the market downturn, Trump told reporters he was not concerned about the selloff.
"Nope, doesn't concern me. I think some people are going to make great deals by buying stocks and bonds and all the things they're buying. I think we're going to have an economy that's a real economy, not a fake economy," he said.
Trump Does It His Way
Earlier on Tuesday, Trump was enraged by Canada's electricity tariff. White House economic adviser Peter Navarro described Trump's threat to raise tariffs as a "negotiating tactic." "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 aluminimum coming into the United States from Canada, one of the highest tariffing nations anywhere in the world," Trump announced.
"I will shortly be declaring a National Emergency on Electricity within the threatened area," he added.
Trump, in a follow-up post on Truth Social, expressed his outrage, vowing that Canada would face an unprecedented "financial penalty" for its electricity tariff. Several Northeastern states rely on Canada for additional energy supply.
"Why would our Country allow another Country to supply us with electricity, even for a small area? Who made these decisions, and why? And can you imagine Canada stooping so low as to use ELECTRICITY, that so affects the life of innocent people, as a bargaining chip and threat? They will pay a financial price for this so big that it will be read about in History Books for many years to come!," Trump raged.
On Tuesday, the president repeatedly criticized the United States' northern neighbor. He also issued a warning that additional auto tariffs would be imposed on April 2. His goal is to pressure Canada into removing its retaliatory tariffs on American dairy and agricultural goods.
"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," he said.
He concluded by proposing to eliminate all tariffs if Canada agrees to join the United States as its 51st state. "The only thing that makes sense is for Canada to become our cherished Fifty First State. This would make all Tariffs, and everything else, totally disappear," he wrote.
The financial markets have reacted negatively to Trump's economic policies. On Monday, concerns over a possible recession grew as the markets plummeted, resulting in the Nasdaq suffering its steepest decline since 2022.
Meanwhile, Canada remains in Trump's crosshairs. According to ABC News, Canadians staying in the United States for 30 days or more will soon be required to register their information with the U.S. government.
Additionally, under a new rule set to be published in the federal register on Wednesday, they will also need to provide fingerprints starting April 11. Trump's escalation of the trade dispute with Canada follows Ottawa's countermeasures against U.S. tariffs introduced last week.
