WASHINGTON − President Donald Trump is reversing course and no longer doubling tariffs on steel and aluminum imports from Canada, Peter Navarro, the White House’s senior counselor for trade and manufacturing, said Tuesday.
The shift comes in response to Ontario Premier Doug Ford saying he would suspend a 25% electricity surcharge on about 1.5 million U.S. energy users in New York, Michigan and Minnesota.
Trump had hinted at the reversal Tuesday afternoon and Navarro confirmed it, saying Ford and Commerce Secretary Howard Lutnick “had a cordial discussion, and Mr. Ford, in his wisdom, decided to back away from his electricity surcharge of 25%.”
Navarro added that Ford “understood that this was not going to be a fight that he could win.”
The turnabout came after Trump on Tuesday morning said he would be doubling tariffs on Canadian steel and aluminum imports, set to go in effect Wednesday, from 25% to 50%. With Trump backtracking, the steel and aluminum tariff rate for Canadian imports will remain at 25%.
Trump downplayed the impact of his tariff threats on the plunging stock market. He has argued the tariffs are needed to help rebuild the U.S. manufacturing sector.
“Markets are going to go up and they’re going to go down. But you know what? We have to rebuild our country,” Trump told reporters gathered on the White House South Lawn as he promoted Tesla vehicles alongside Elon Musk, CEO of Tesla and a senior White House adviser.
In another twist to a wild session, U.S. stocks reversed course late Tuesday after Ford said he would suspend the 25% electricity surcharge.
The retreat comes after Trump said earlier in the day he would double tariffs on Canadian steel and aluminum in retaliation for Ford’s action. Investors responded to that escalation by selling off stocks. The tech-heavy Nasdaq sunk deeper into correction territory, which is defined as at least 10% below a record high, while the broad S&P 500 bounced off its correction line.
Around 3 P.M. ET, the blue-chip Dow was down 0.46%, or 193.81 points, at 41,718.95 but well off its session low of 41,175.37. The S&P 500 edged up into the green but slipped slightly, last down 0.12%, or 6.93 points, at 5,607.63. The Nasdaq rose 0.7%, or 122.49 points, to 17,590.82.
Ford said Tuesday that Trump launched an “unprovoked attack” on Canada when he increased the steel and aluminum tariffs.
“We will not back down. We will be relentless. I apologize to the American people that President Trump decided to have an unprovoked attack on our country, on families, on jobs. And it’s unacceptable,” Ford said on MSNBC.
Ford said CEOs should try to change Trump’s mind.
“You see the market tumbling. Consumer confidence is down,” he said. “And if he continues on with this, assembly plants in Michigan will shut down, and around the country, whoever makes autos, and as well as businesses, they’re going to hurt.”Recession fears amid wild swings in stocks
The stock market convulsions amid a series of escalating trade moves, including tariffs on Mexico and China, have some economists fearing a recession and the return of higher inflation, which has remained stubbornly above the Federal Reserve’s 2% goal.
Trump would not rule out an economic slowdown in an interview that aired over the weekend. “I hate to predict things like that. There is a period of transition because what we’re doing is very big,” Trump said in an interview that aired on “Sunday Morning Futures With Maria Bartiromo.”
Several companies − from retail giants Walmart, Kohl’s and Dick’s to airlines such as Delta and Southwest – said they’re bracing for a possible slowdown in consumer spending. Consumers account for about 70% of the economy. Recent surveys show consumers growing less optimistic.
Small business sentiment has also been dented. The National Federation of Independent Business Small Business Optimism Index showed sentiment declining and uncertainty over the outlook rising. The Uncertainty Index rose to the second-highest reading in the survey’s history, which dates to 1973.
White House press secretary Karoline Leavitt downplayed the plunging stock market as “a snapshot in a moment in time” and blamed former President Joe Biden for the ongoing economic turbulence – even though it is Trump’s tariffs that have rattled Wall Street.
“We are in a period of economic transition,” Leavitt said at a Tuesday briefing with reporters.
The Dow Jones Industrial Average is down 3.6% since Trump’s Jan. 20 inauguration, while the S&P 500 and Nasdaq have erased its post-election gains as well. Like Trump, Leavitt did not rule out a recession but pointed to Trump’s first term in office as reason for economic optimism today.
“Look at President Trump’s results in his first term. If people are looking for certainty, they should look at the record of this president,” Leavitt said.
− Joey Garrison
Tariffs are likely to disrupt supply chains and increase the cost of transportation, which will lead to a rise in price for almost everything, Truist head of U.S. economics Mike Skordeles previously told USA TODAY.
“Broadly speaking, higher tariffs will increase import costs, forcing companies to choose between absorbing the hit to their margins or passing it on to consumers,” said Madhav Durbha, a supply chain expert and group vice president of consumer-packaged goods and manufacturing at RELEX. “Either way, this creates inflationary pressure and dampens consumer spending, impacting not only individual companies but the broader market.”
As previously reported, the U.S. auto industry and a broad array of common imports from Canada to the U.S. could be affected by the tariffs, according to the Bureau of Industry and Security and Trading Economics. For consumers, that could mean higher prices for appliances, cereal, milk products, alcoholic beverages and more.
Candace Laing, president and CEO of the Canadian Chamber of Commerce, called the U.S. announcement of 50% tariffs on steel and aluminum “incredibly destructive.”
“This series of escalations is quickly hitting a ceiling where Americans and Canadians are set to feel the hurt,” Laing said in a statement. “The stock market volatility is a glaring signal that this economic chaos must end.”
She said similar tariffs on steel and aluminum during Trump’s first term led to a net loss of tens of thousands of American blue-collar jobs.
“Steel and aluminum are about strength; these tariffs do nothing but weaken us both,” Laing said. “President Trump may as well hand over North America’s steel and aluminum leadership to China.”
− Sarah D. Wire
For a nation facing a housing affordability crisis, a deepening trade war comes at the wrong time. As USA TODAY previously reported, an initial round of tariffs proposed for Canada, Mexico and China would have added about 5%, or $21,000, to the cost of the median-priced newly built home.
Nearly three-quarters of imported sawmill wood products come from Canada, according to an analysis from an industry consultant. Canada also supplies about 11% of the hardware used in residential construction.
With the stock market tumbling, consumer confidence skidding and U.S. companies ramping up layoffs, it may look like the nation is hurtling toward a recession amid Trump’s widening global trade war and federal job cuts.
It isn’t – yet. That’s mostly because American consumers are still in good financial shape and the nation’s businesses generally remain optimistic despite growing uncertainty about the trade conflicts and federal cuts, forecasters say.
A recession is informally considered at least two straight quarters of declining economic output. But the technical definition is “a significant decline in economic activity that is spread across the economy and lasts more than a few months,” according to the nonprofit National Bureau of Economic Research.
The measure is based on employment, income, consumer spending and industrial production, among other criteria. An economic tailspin is typically accompanied by hundreds of thousands or millions of net job losses.
− Paul Davidson
More U.S. airlines cut their earnings estimates on Tuesday, following Delta Air Lines and citing mounting economic uncertainty triggering a pullback in corporate and consumer spending. United Airlines said its first-quarter earnings are now expected to come in at the lower end of its forecast because of a 50% drop in government-related travel bookings.
“Economic uncertainty is a big deal,” American Airlines CEO Robert Isom said at a J.P. Morgan industry conference.
Negative consumer sentiment among Canadians about U.S. products has erupted, and American liquor, wine and spirits are the first targets.
Many Canadian stores have been pulling American alcohol brands off shelves as part of retaliatory measures to Trump’s tariffs on Canadian products, which is temporarily on hold until April 2. The maker of Jack Daniel’s called the removal of his company’s whiskey from Canadian shelves “worse than a tariff.”
Asked at a media briefing Tuesday if Canada is still a close ally, White House press secretary Karoline Leavitt described the country as a neighbor and a partner. “They have always been an ally,” she said. “Perhaps they are becoming a competitor now.”
She also reiterated Trump’s far-fetched desire for Canada to join the U.S. as a state, which Canadian leaders oppose. “He believes that Canadians would benefit greatly from becoming the 51st state of the United States of America,” she said.
Leavitt said Trump has not yet spoken with Mark Carney, who is set to replace Justin Trudeau as Canada’s prime minister after Carney won Sunday’s Liberal Party election.
− Betty Lin-Fisher and Joey Garrison
Trump on Tuesday once again expressed his desire to see the U.S. absorb its northern neighbor. In recent months, Trump has repeatedly suggested he wants to annex Canada and has referred to its outgoing prime minister as “Governor Justin Trudeau of the Great State of Canada” − much to the aggravation of Trudeau and many Canadians.
“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,” Trump wrote on Truth Social.
Trump’s overtures were panned by Carney on Sunday in his first speech after winning the leadership of the governing Labor Party.
Canada “never, ever, will be part of America in any way, shape, or form,” said Carney, adding that people “are worried about Canada’s future, in the face of President Trump’s threats and a more divided and dangerous world.”
Unfazed, Trump wrote Tuesday on his social media post that by Canada joining the U.S., the “greatest and most powerful nation in the World will be bigger, better and stronger than ever − And Canada will be a big part of that.”
“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,” he wrote.
Trump promised during the 2024 campaign to turbocharge the economy, declaring he’d work a “miracle” that would bring about “extraordinary” boom times. Rallying in Grand Rapids, Mich., the day before the election, Trump predicted his promised victory would swiftly improve the job market and fatten wallets.
“We’re just one day… a half a day… away from the best jobs, the biggest paychecks and the brightest economic future the world has ever seen,” the former and future Republican president declared as the crowd held up signs reading “Dream big. Again!” and “Trump will fix it.”
Now − nearly two months into a second Trump term − his administration is bracing Americans for economic turbulence as last year’scampaign rhetoric collides with the reality of an increasingly uncertain economy. Read more here.
− Zac Anderson
Groups that represent generic drug manufacturers and hospital pharmacists have warned tariffs on Chinese imports could impact both drug prices and supplies.
China is among the largest suppliers of ingredients used in generic drugs. Generic drugs are less expensive than brand name drugs and manufacturers buy drug ingredients from large factories in China and India that can make these ingredients more cheaply than in the United States. About 90% of U.S. prescriptions are generics.
The Association for Accessible Medicines, a trade group that represents generic drug manufacturers, has warned the tariffs could increase drug shortages. The American Society of Health-System Pharmacists warned the extra costs from tariffs, combined with Biden-era inflation penalties levied on drug companies that raise prices more than the rate of inflation, could exacerbate drug shortages.
− Ken Alltucker
Against the backdrop of recession concerns, Americans are yet again bracing for a possible government shutdown. Congress has until 11:59 p.m. on Friday to pass legislation to keep the government funded. Otherwise, a majority of federal employees will go without pay or be forced to stop working while most government services pause.
House Republicans unveiled a spending bill, supported by Trump, that keeps the government running until Sept. 30. The vote on the bill, known as a continuing resolution, is expected later Tuesday. But it’s unclear whether the bill has enough support to pass the House. Some Democrats have already spoken out against it.
− Sudiksha Kochi
Contributing: Reuters
