By David Goldman and Elisabeth Buchwad, CNN
Donald Trump says his tariffs on Canadian vehicles "will, essentially, permanently shut down the automobile manufacturing business in Canada". Photo: AFP/CHIP SOMODEVILLA
Ontario has agreed to suspend its 25 percent charge on exports of electricity to three northern states of the US, following a threat from US president Donald Trump to double tariffs.
Ontario Premier Doug Ford had earlier warned he would shut off electricity supply to the US entirely if the trade war escalated.
Trump said he was now looking at reducing tariffs on Canada instead, Reuters reported.
It comes after Trump threatened a sharp escalation in the budding trade war with Canada in retaliation for the 25 percent surcharge..
Stocks immediately tumbled after Trump's Truth Social post on Tuesday (local time) announcing his latest tariff threat before paring some losses. The Nasdaq Composite ticked into the green, up 0.3 percent, while the S&P 500 and Dow remained in negative territory, down 0.3 percent and 0.8 percent, respectively.
Trump had said he would respond in kind to Ontario's 25 percent surcharge on electricity to New York, Minnesota and Michigan with a 25 percent tariff on Canadian electricity. That could increase costs even more for Americans, particularly in northern states that rely on energy from Canada. Ontario's surcharge, announced on Monday, threatens to increase bills by US$100 (NZ$175) a month, Ontario Premier Doug Ford said.
In addition, Trump said he would levy even larger tariffs on Canadian steel and aluminium than he had planned.
"Based on Ontario, Canada, placing a 25% Tariff on 'Electricity' coming into the United States, I have instructed my Secretary of Commerce to ad an ADDITIONAL 25% Tariff, to 50%, on all STEEL and ALUMINIUM COMING INTO THE UNITED STATES FROM CANADA, ONE OF THE HIGHEST TARIFFING NATIONS ANYWHERE IN THE WORLD," Trump said in a social media post on Tuesday.
Ford threatened to shut off electricity supply to the US entirely.
"I want to send more electricity down to the US to our closest allies," Ford said in an interview on CNBC on Tuesday. "Is it a tool in our tool kit?" he said of a shutoff. "100 percent. And as he continues to hurt Canadian families, Ontario families, I won't hesitate to do that."
Ford said he was set to speak with Commerce Secretary Howard Lutnick on Tuesday.
Trump also said he would declare a national electricity emergency in the states Ontario targeted. "Can you imagine Canada stooping so low as to use ELECTRICITY, that so affects the life of innocent people, as a bargaining chip and threat?," Trump said in a Truth Social post on Tuesday.
Meanwhile, he threatened to "substantially" increase tariffs on cars coming into the United States from Canada starting on 2 April.
The president said those autos tariffs "will, essentially, permanently shut down the automobile manufacturing business in Canada. Those cars can easily be made in the USA!"
The announcement comes ahead of a midnight deadline for when Trump threatened to impose 25 percent tariffs across all steel and aluminium imports.
Another looming threat: A 250 percent tariff on dairy products from Canada, which the president announced on Friday, though he has yet to finalise anything. Trump said the tariff would be in response to Canada's taxes on American dairy products, which can be as high as 241 percent in the case of milk.
In an interview with CNN's Wolf Blitzer on Tuesday, Ford said such tariffs get "under (Trump's) skin," but said it's all the more reason why he thinks Trump should want to "sit down and talk about it".
Ontario Premier Doug Ford says tariffs get under Donald Trump's skin. Photo: AFP / Geoff Robins
A threat to US economy, too
While Trump's aim is to hurt the Canadian economy by imposing higher steel and aluminium tariffs on them, the move risks hurting the American economy as well.
Canada is the top source of iron, steel and aluminium sent to the US. The US imported US$11.4 billion worth of aluminium and $7.6b worth of iron and steel from Canada last year, according to data from the US Commerce Department. (The government data groups iron and steel together.)
Canadian aluminium exports account for 41 percent of all aluminium the US imported last year, while Canadian iron and steel accounted for nearly a quarter of it.
The threat of a 25 percent tariff on Canadian aluminium alone could cost the US 100,000 jobs, the chief executive of one of the largest US aluminium makers, Alcoa, recently warned.
In total, the aluminium industry directly employs 164,000 workers in the US and indirectly employs an additional 272,000 workers within industries such as mining, construction and manufacturing, according to the Aluminium Association.
Though Alcoa is headquartered in Pittsburgh, a significant share of Alcoa's aluminium production is located in Canada and then shipped to the US, William Oplinger, chief executive of Alcoa, said at an industry conference last month.
- CNN, with Reuters
