Friday, May 30, 2025

U.S. Drops 50% Tariff Plan on Canada, Ending Tense Trade Standoff

Peter Navarro, White House trade policy advisor, speaks with reporters at the White House. / AP Newsis
Peter Navarro, White House trade policy advisor, speaks with reporters at the White House. / AP Newsis

The U.S. dropped its plan to impose an additional 25% tariff on Canadian steel and aluminum, while Canada agreed to withdraw its planned electricity price hike for the U.S., reaching a dramatic compromise.

Canada, the largest exporter of steel and aluminum to the U.S., once again saw President Donald Trump’s gamble on trade pay off.

In the afternoon, the White House trade policy advisor, Peter Navarro, told CNBC that President Trump had withdrawn the plan to impose a 50% tariff on Canadian steel and aluminum starting Wednesday.

After previously imposing a 25% tariff on Canada and Mexico, undermining the United States-Mexico-Canada Agreement (USMCA) he signed during his first term, Trump has now decided to withdraw his plan to impose an additional 25% tariff on Canadian steel and aluminum.

The dispute had escalated rapidly, with both sides preparing for a confrontation.

Trump abruptly announced on his social media platform, Truth Social, that starting on Wednesday, an additional 25% tariff would be imposed on Canadian steel and aluminum, raising the total tariff to 50%. Canada is the leading exporter of steel and aluminum to the U.S.

Trump explained that the tariff was a retaliatory measure against Ontario’s 25% increase in electricity prices for the U.S.

Previously, Ontario had imposed a 25% tax on electricity exports to the U.S. in response to Trump’s decision to break the USMCA agreement and impose a 25% tariff on Canadian products.

Both sides appeared headed for a fierce showdown.

Ontario Premier Doug Ford, in an interview with CNBC, warned that Ontario might cut off the electricity supply to the U.S. if Trump proceeded with the additional 25% tariff.

Ontario, which operates nuclear power plants, supplies electricity to 1.5 million households across Minnesota, Michigan, and New York.

However, doubts emerged about whether Trump would follow through. A senior Trump administration official suggested that the tariff threat was a strategic move to pressure Ontario into lowering electricity prices, noting that Trump had not yet signed an executive order.

U.S. Commerce Secretary Howard Lutnick stepped in as tensions peaked, contacting Premier Ford and brokering a compromise.

Ontario, which had threatened to cut off electricity, has now decided to cancel the 25% electricity price hike.

Ontario agreed to withdraw its electricity price hike, and both parties committed to resuming trade talks in Washington on Wednesday.

Navarro confirmed that the 50% tariff was now off the table: “That’s correct.”

He emphasized that the tariffs would not rise to 50% tomorrow and praised Lutnick for securing the agreement.

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