March 12, 2025 – U.S. President Donald Trump reversed his decision to impose an additional 25% tariff on Canadian steel and aluminum late Tuesday after the province of Ontario announced it would rescind its planned surcharge on electricity exports to the United States.

The move comes after a day of uncertainty in global markets, as investors reacted to Trump's earlier announcement that tariffs on Canadian steel and aluminum would double to 50%. The decision had sent shockwaves through the financial sector, triggering losses across major stock indices in the U.S., Europe, and Asia.

A Quick Policy Shift

The White House initially justified the tariff increase as a response to Ontario’s planned 25% surcharge on electricity exports to three U.S. states. However, following intense negotiations between Canadian and U.S. officials, Ontario Premier Doug Ford announced late Tuesday that the electricity surcharge would not go forward.

In response, Trump swiftly walked back the tariff hike, confirming that Canada’s steel and aluminum exports to the U.S. would remain subject to the previously announced 25% tariff, rather than increasing to 50% as initially planned.

“The United States values its strong trade partnership with Canada,” Trump said in a brief statement. “Following constructive discussions, we have decided to maintain the current tariff rate and avoid unnecessary economic disruptions.”

Market and Industry Reactions

The reversal provided some relief to markets, with stock futures showing signs of recovery after steep losses earlier in the day. Investors had feared that escalating trade tensions between the two North American allies could worsen inflationary pressures and push the U.S. economy closer to recession.

Canadian industry leaders welcomed the decision, though many remain cautious about the future of trade relations under the Trump administration.

Despite the reversal, trade tensions remain high, with businesses in both countries calling for clearer long-term agreements. Trump has hinted at further trade actions in the coming weeks, suggesting that tariffs on other imported goods could still be on the table.

Meanwhile, economists are watching how these developments will impact inflation and consumer spending in the U.S. The Federal Reserve has warned that additional trade disruptions could complicate its efforts to stabilize the economy.

For now, Canada has avoided a major escalation in the trade dispute, but ongoing policy shifts from the Trump administration ensure that uncertainty will remain a dominant factor in economic discussions.