Ontario has agreed to suspend its 25% surcharge on electricity exports to three U.S. states, Premier Doug Ford announced on Tuesday, while U.S. President Donald Trump said he’d “probably” reduce proposed tariffs on Canada.
“I’ll let you know about it,” Trump told reporters at the White House on whether the potential 50% duties on aluminum and steel would be implemented as planned on Wednesday. They had been planned at 25%, but Trump doubled them when Ford responded on Monday.
Trump referred to Ford at different times as “a very strong man in Canada,” and “a gentleman” who was “nice” to have called and had his “respect.” Ford, though, said it was U.S. Commerce Secretary Howard Lutnick who had called him.
Speaking to reporters in Toronto on Tuesday afternoon, Ford characterized the call as an olive branch and they agreed to meet on Thursday in Washington. The premier is to be accompanied by Federal Finance Minister Dominic LeBlanc. Ford said he’d agreed to temporarily suspend the tax, a tool his government would “always have” in its tool kit.
“This was the right decision,” he said. “They understand how serious we are about the electricity and the tariffs, and rather than going back and forth and and having threats to each other, we have both agreed that cooler heads prevail.”
Canada is by far the top supplier of both steel and aluminum to the United States. The neighbouring country exported $9.4 billion (C$13.6 billion) worth of aluminum to the U.S. in 2024, according to MarketWatch, significantly ahead of the second-largest exporter, the European Union, which exported $1.5 billion. Canada also exported $7.1 billion worth of steel last year, compared to $7 billion from the European Union.
Stocks slump
Stocks markets have slumped in response to the uncertainty. On Monday, the Dow Jone Industrial Average dropped 890.01 points or 2.1% to close at 41,911.71. The DJIA fell an additional 478.23 points 1.1%, closing at 41,433.48. From March 7 to 11, the DJIA declined by 1,368.24 points, a drop of about 3.2%.
In Toronto, the S&P/TSX Composite Index decreased by 378.05 points or 1.5% to close at 24,380.71. The index fell an additional 132.51 points 0.5% on Tuesday to close at 24,248.20.
Trump had earlier stated in a post on Truth Social that he had instructed Lutnick to impose an additional 25% tariff, set to take effect Wednesday morning.
Trump, in front of the White House on Tuesday where he apparently bought a Tesla from Elon Musk to support the company’s sagging share price, also repeated his case for Canada to join the U.S.
“Canada would be great as our cherished 51st state,” the president said. “You wouldn’t have to worry about borders, you wouldn’t have to worry about anything. And by the way, Canada is very highly taxed, and we’re very low tax.”
Who’s subsidizing whom?
Trump also repeated the claim that the U.S. subsidizes Canada by over $200 billion annually.
However, economist Jim Stanford, director of the Centre for Future Work in Vancouver, disputed these figures in an article published last month by the University of British Columbia. According to U.S. data, the bilateral trade deficit was $40 billion in 2023, down 29% from 2022, with a further 9% decline in the first nine months of 2024.
“Compared to a two-way trade flow of almost $1 trillion per year, this imbalance is puny,” Stanford said.
He also noted that the U.S. enjoys a surplus in services trade and investment income from Canada, which helps offset any trade deficit.
“Most Canadian exports to the U.S. are unfinished inputs that American businesses rely on for production,” he said. “Tariffs would increase costs for these materials, reducing U.S. firms’ competitiveness in both domestic and export markets.”