Trump dropping plan to double Canadian metal tariffs

White House senior counselor Peter Navarro has said that President Donald Trump was no longer planning to double steel and aluminum tariffs for Canadian imports, after Washington's talks with its northern neighbour.

This means that imports of both metals from Canada, like those from other trading partners, would face a 25% tariff after midnight as originally planned.

The reversal came just hours after Mr Trump ramped up a burgeoning trade war with Canada, vowing to double tariffs on all imported steel and aluminium products from Canada to 50%.

Mr Trump's latest salvo, which sent financial markets reeling and rekindled fears of inflation, followed Ontario Premier Doug Ford's announcement that he would place a 25% surcharge on the electricity Canada's most populous province supplies to more than one million US homes unless Mr Trump dropped all of his tariff threats.

Mr Ford later agreed to suspend the surcharge and meet with US Commerce Secretary Howard Lutnick on Thursay, calling for cooler heads to prevail. Mr Trump said he respected the move.

In an earlier post on his Truth Social media platform, Mr Trump said he had instructed Mr Lutnick to put an additional 25% tariff on the metals products from Canada that will go into effect tomorrow morning.

Mr Trump also blasted Canada for trade protections it has in place on dairy and other agricultural products, and threatened to "substantially increase" duties on cars coming into the US that are set to take effect on 2 April" if other egregious, longtime tariffs are not likewise dropped by Canada".

The US president shook off market gyrations, telling reporters that markets would go up and down, but he had to rebuild the economy.

Before agreeing to meet Mr Lutnick, Mr Ford told MSNBC: "We will not back down. We will be relentless. I apologise to the American people that President Trump decided to have an unprovoked attack on our country."

About 1.5 million homes and businesses in New York state, Michigan and Minnesota are powered by Ontario's utilities, and Mr Trump said he would declare a national emergency to mobilise resources to assist the affected areas.

The escalation of the trade war occurred as Prime Minister Justin Trudeau was preparing to formally hand over power this week to his successor Mark Carney, who overwhelmingly won the leadership race of the ruling Liberals last weekend.

Mr Carney said he could not speak with Mr Trump until he was sworn in as prime minister.

White House press secretary Karoline Leavitt told reporters that Mr Ford's initial comments were "egregious and insulting" and said Canada would be "very wise not to shut off electricity for the American people".

Mr Trump was determined to ensure the US relied on its own domestic electricity, she said.

Alberta, for its part, wants to de-escalate the trade dispute with Washington, its energy minister told reporters at the CERAWeek energy conference in Houston, saying the oil-producing western Canadian province provided the US with several options.

The back-and-forth between the US and Canada whips awed financial markets that have been battered by Mr Trump's focus on tariffs.

After tumbling hard through the morning when Mr Trump announced the new doubling of rates on Canadian metals, stocks rebounded after Mr Ford said he would suspend the surcharge.

The benchmark S&P 500 index, however, was down marginally in late-afternoon trading.

US stocks have fallen hard since reaching a record high about a month after Mr Trump took office on 20 January, with nearly $5 trillion of market value erased from US indexes.

Mr Trump is set to meet with about 100 chief executives of US firms as evidence grows that his trade policies are posing a downside risk to the economy, threatening to dash a "soft landing" that until recently appeared as the base case and reignite inflation.

Whether any of them will be willing to raise such concerns directly with Mr Trump is unknown. Ahead of the gathering, however, businesses ranging from airlines to department stores said his fast-shifting trade policies are starting to have a chilling effect across many industries, as consumers pull back on purchases of everything from basic goods to travel.

Confidence takes a hit

Ms Leavitt underscored that broader 25% levies on all steel and aluminium imported to the US from anywhere would kick in early tomorrow, with another round of tariffs on autos as well as tit-for-tat reciprocal tariffs lined up for early April.

Canada and China have retaliated with their own tariffs on US exports, while Mexico stopped short of retaliation after Mr Trump delayed his planned levies on the southern US neighbour.

The metals tariffs will apply to millions of tons of steel and aluminium imports from Canada, Brazil, Mexico, South Korea and other countries that had been entering the US on a duty-free basis under carve-outs.

Mr Trump has vowed that the tariffs will be applied "without exceptions or exemptions" in a move he hopes will aid the struggling US industries. Mr Trump's promise to double the metals levies on Canada sent some aluminium prices soaring.

Price premiums for aluminium on the US physical market climbed to a record high above $990 a metric ton today.

Mr Trump's hyper-focus on tariffs since taking office in January has rattled investor, consumer and business confidence in ways that economists increasingly worry could cause a recession.

A small business survey showed sentiment weakening for a third straight month, fully eroding a confidence boost following Mr Trump's 5 November election victory, and a survey of households by the New York Federal Reserve showed consumers growing more pessimistic about their finances, inflation and the job market.

Reuters polls of economists showed risks to the Mexican, Canadian and US economies are piling up amid deep uncertainties for businesses and decision-makers.

The surveys showed 70 of 74 economists polled across Canada, the US and Mexico judged that the risk of a recession had increased, and upside risks to inflation in the US rose in particular.

Ms Leavitt sidestepped questions about growing economic concerns, telling reporters: "There's a lot of reason to be optimistic. The American people, CEOs, people on Wall Street and on Main Street should bet on this president. He is a deal-maker. He is a businessman, and he's doing what's right for our country."