The trade war between the USA and Canada escalated on Tuesday when American President Donald Trump first announced that the USA intended to impose penalty tariffs on Canadian steel and aluminum at 50 percent from Wednesday – a doubling of what was previously announced.
Trump also threatened the Canadian car industry.
"This will be introduced tomorrow, March 12", Trump wrote on his own platform Truth Social about the tariffs on steel and aluminum. He added that further fees would be "significantly increased" from April 2 if Canada did not withdraw announced tariffs on, among other things, food products.
Fee on electricity prices
The background to Trump's tariff increase was that the Canadian province of Ontario's Premier Doug Ford imposed a fee of 25 percent on electricity prices for 1.5 million American households and companies in the border states of Minnesota, New York, and Michigan.
The fee was seen as a response to the Trump administration's earlier threat of 25-percent tariffs on goods from Canada.
I will not hesitate to increase this fee. If the USA escalates, I will not hesitate to shut off the electricity completely, Doug Ford said.
But then the tone shifted.
Doug Ford stated that the situation needed to be cooled down.
Ford said that he had spoken on the phone with the USA's Trade Minister Howard Lutnick, who had requested a meeting in Washington DC, writes BBC.
Temporary pause
Ford has accepted these meetings, which will take place over the coming days, and during this time, he has agreed to temporarily pause the fee on electricity prices.
On a question about whether this meant that the USA would withdraw the 50-percent tariff increase, Ford replied that Lutnick first had to talk to Trump, but that he was "pretty convinced" that the Americans would agree to it.
Not long after Ford's announcement, Trump's trade advisor Peter Navarro announced that Trump was withdrawing the threat of the doubled penalty tariffs. The initial penalty tariff of 25 percent, however, remains, starting on Wednesday.
