In a swift de-escalation of cross-border trade tensions, the U.S. has reversed plans to impose additional 25% tariffs on Canadian steel and aluminum following Ontario’s decision to suspend retaliatory charges on electricity exports to three American states. The move underscores the delicate balance of North American trade dynamics ahead of critical USMCA negotiations.
From Retaliation to Resolution
The White House confirmed the tariff reversal late Tuesday, attributing it to Ontario Premier Doug Ford’s commitment to withdraw a 25% surcharge on power exports to Michigan, Minnesota, and New York. The decision came hours after President Donald Trump threatened to raise Canadian steel tariffs to 50% via social media, declaring “U.S. energy security must be protected.”
Negotiations Ahead
A joint statement revealed Ford will meet U.S. Commerce Secretary Howard Lutnick in Washington this Thursday to discuss USMCA revisions ahead of an April 2 tariff deadline. This follows earlier exemptions for USMCA-compliant goods announced March 6, which cover an estimated 38% of Canada-to-U.S. exports.
Trade Tensions Timeline
The dispute escalated when Canada imposed phased tariffs on $107 billion of U.S. goods after Washington’s March 4 broad tariff rollout. Ontario’s electricity surcharge, implemented Monday, targeted energy-dependent U.S. manufacturing states. Analysts suggest the rapid resolution reflects both sides’ economic interdependence, particularly in metals and energy sectors.
Despite the breakthrough, a 25% U.S. steel and aluminum tariff for all trading partners takes effect March 12, aligning with Trump’s February order eliminating duty-free exemptions. Market watchers anticipate renewed focus on USMCA compliance as the April deadline approaches.
