Ford and Lutnick agree to trade talks as Trump reverses plan to double tariffs on Canadian metals
Ontario Premier Doug Ford announced on Tuesday that he would temporarily suspend Ontario’s planned 25 percent surcharge on electricity exports to the US.
CNBC reports that his decision came after discussions with US Commerce Secretary Howard Lutnick, who agreed to resume trade talks.
The announcement followed an earlier escalation by US President Donald Trump, who declared he would double tariffs on Canadian steel and aluminum imports from 25 percent to 50 percent.
Trump said his decision was in response to Ontario’s surcharge on electricity exports to Michigan, New York, and Minnesota.
However, after Ford and Lutnick’s conversation, White House trade adviser Peter Navarro confirmed to CNBC that Trump would not implement the additional tariff increase.
Ford stated that he and Lutnick had a “productive conversation about the economic relationship between the United States and Canada” and agreed to de-escalate.
“We have both agreed, let cooler heads prevail,” Ford told reporters.
Despite Trump’s reversal, the White House confirmed that the original 25 percent tariff on steel and aluminum imports would still take effect at midnight on Wednesday.
White House spokesperson Kush Desai said Trump “has once again used the leverage of the American economy, which is the best and biggest in the world, to deliver a win for the American people.”
Market reaction and Ford’s warning
Trump’s tariff threats led to a sharp market downturn. The Dow Jones Industrial Average fell more than 500 points, while the S&P 500 dropped 0.8 percent and the Nasdaq Composite declined 0.4 percent.
Before Ford’s decision to pause the surcharge, he had warned that Ontario would not back down. In an MSNBC interview, he called Trump’s move “an unprovoked attack on our country, on families, on jobs.”
Speaking on CNBC’s Money Movers, Ford suggested that Ontario could cut off its energy supply to the US if Trump continued “to hurt Canadian families.”
He said, “I won’t hesitate to do that,” but added that it would be a last resort.
Ford also blamed Trump for the economic uncertainty, stating, “There’s one person to be blamed if we go into a recession, it will be called the Trump recession.”
Despite Trump’s reversal on the tariff hike, Ford and Lutnick plan to meet with US Trade Representative Jamieson Greer in Washington, DC, on Thursday to discuss revisions to the United States-Mexico-Canada Agreement (USMCA).
Trump ties tariffs to Canadian statehood
Trump’s shifting tariff stance came as he repeated his calls for Canada to become the “Fifty First State.”
In a Truth Social post, he said the only way to eliminate trade disputes would be for Canada to join the US.
“The only thing that makes sense is for Canada to become our cherished Fifty First State,” he wrote.
Trump claimed that merging Canada into the US would eliminate tariffs, reduce taxes for Canadians, and create “the safest and most beautiful Nation anywhere in the World.”
He assured that O Canada would still be played but as part of “a GREAT and POWERFUL STATE within the greatest Nation that the World has ever seen.”
The US president also issued new trade threats, warning that if Canada did not remove other tariffs on US goods, he would increase tariffs on auto imports starting April 2.
He stated that this move would “essentially, permanently shut down the automobile manufacturing business in Canada.”
In addition, Trump threatened to declare a national emergency over electricity imports from Canada.
He demanded that Canada “immediately drop” an “Anti-American Farmer Tariff” on US dairy products and vowed to “substantially increase” trade penalties if his demands were not met.
Trump’s on-again, off-again trade measures have inflamed tensions with Canada.
A senior US administration official told CNBC that while Trump had not yet signed the formal paperwork for the tariff increase, his escalation was meant to send a strong signal in response to Ford’s policies.
Trump’s fluctuating tariffs on Canada and Mexico have drawn backlash, with boycott movements against US products and strong political opposition in Canada.
Outgoing Canadian Prime Minister Justin Trudeau has accused Trump of attempting to weaken Canada to make annexation easier.
Trump previously imposed tariffs on Canada and Mexico in February, then delayed them, reimposed them, and later partially lifted them.
Ford initially vowed to maintain Ontario’s tax despite Trump’s latest tariff reversal but later agreed to suspend the surcharge after discussions with Lutnick.
