Well, that didn’t take too long. The Canadian province of Ontario has backed down after threatening to levy a surcharge on electricity to three U.S. states as President Donald Trump threatened to double the tariff he has already placed on Canadian goods.
Doug Ford, premier of Ontario, and U.S. Secretary of Commerce Howard Lutnick released a statement on Tuesday indicating they had come to an understanding. The two leaders “had a productive conversation about the economic relationship between the United States and Canada,” according to the statement.
Secretary Lutnick agreed to officially meet with Premier Ford in Washington on Thursday, March 13 alongside the United States Trade Representative to discuss a renewed USMCA (United States-Mexico-Canada Agreement) ahead of the April 2 reciprocal tariff deadline. In response, Ontario agreed to suspend its 25 per cent surcharge on exports of electricity to Michigan, New York and Minnesota.
Ford told reporters that he and Lutnick “have both agreed, let cooler heads prevail.”
Earlier in the day, President Donald Trump wrote a post on Truth Social in which he announced an additional 25 percent tariff on Canadian steel and aluminum imports. It was a response to Canada placing a 25 percent tariff on electricity coming to the United States.
The tariff is set to go into effect on Wednesday. The president further indicated that he would declare a “National Emergency on Electricity within the threatened area.”
In a Monday post, the president indicated he would take further action against Canada after it imposed its 25 percent tariff. “Canada is a Tariff abuser, and always has been, but the United States is not going to be subsidizing Canada any longer,” he wrote.
It is not yet clear whether Canada will budge on its tariff, but it seems that Trump’s threat did have an impact given that Ontario is making this move. Perhaps the Wednesday meeting will move the two nations closer to a resolution that works for both parties. Either way, it appears Trump’s use of tariffs to bring Canada to the bargaining table might be yielding some fruit.