Ontario Premier Doug Ford announced he would pause new tax on electricity exports to certain northern U.S. states after facing backlash from U.S. President Donald Trump, who had threatened significant tariff increases on Canada.
Doug Ford, the leader of Ontario, Canada’s largest province, decided to suspend the proposed 25% surcharge following a “productive” discussion with the U.S. Commerce Secretary and the promise of a future meeting.
The White House stated Trump would withdraw his latest threats, which included targeting the auto sector and doubling tariffs on Canadian steel and aluminium imports.
This development marked another chapter in a trade conflict that has strained economic ties between the neighbouring countries.
“Cooler heads prevailed,” said Peter Navarro, a trade adviser to Trump, in an interview with CNBC, confirming that the U.S. would not proceed with the tariff hikes.
Canada, one of the United States’ closest trading partners, has been a frequent target of Trump’s trade policies since his office began. These policies have imposed a 25% tariff on goods from Canada and Mexico, with temporary exemptions for certain products.
Trump justified these measures as a response to issues like drug trafficking and illegal migration crossing into the U.S.
Doug Ford’s Surchage
Canada’s steel and aluminium exports are also subject to 25% tariffs, set to take effect on Wednesday, following Trump’s decision to end exemptions previously granted to some nations. Ottawa has called these actions unwarranted and has retaliated with tariffs on CAD 30 billion worth of U.S. products.
In response, Doug Ford had initially proposed a surcharge on electricity exports to the U.S. to pressure Washington to lift the tariffs. He had even stated he would be prepared to fully halt electricity exports if tensions escalated further.
In a social media post on Wednesday, Trump claimed his threats to double tariffs on Canadian steel and aluminium were a reaction to Doug Ford’s actions. He also criticized Canada for relying on the U.S. for military protection and suggested that becoming the 51st state would eliminate all tariffs and trade disputes.
Tariffs are taxes applied to imported goods, paid by the importing companies to the government.
The announcement triggered market instability. On Tuesday, the S&P 500 index dropped another 0.7%, adding to Monday’s 2.7% decline—the largest one-day fall since December.
Similarly, the UK’s FTSE 100, France’s CAC 40, and Germany’s DAX saw significant losses following Trump’s remarks.
Monday’s sell-off began when Trump referred to the U.S. economy as being in a “transition” when asked about the possibility of a recession. Investors have grown increasingly worried about the economic impact of his trade policies, fearing they could raise inflation while creating uncertainty that stifles market activity.
The tariffs are already causing challenges for small businesses. Jason Goldstein, who owns Icarus Brewing in New Jersey, shared concerns about rising costs linked to tariffs.
Suppliers warned him of potential price hikes on grain and aluminium cans. In response, he stockpiled an extra month’s supply of cans and delayed new purchases.
“It’s a stressful time for us,” Goldstein said. “I’ve never had to follow the news this closely just to figure out what’s coming next for my industry.”
