Trump halts 50% tariffs on Canada after province drops surcharge
What's the story
US President Donald Trump has withdrawn his threat of doubling tariffs on Canadian steel and aluminum to 50%.
The decision came only hours after he threatened to do so in response to Ontario's proposed surcharge on electricity exports to the US.
The move initially rattled markets already concerned about a tariff-induced recession based on worldwide metal levies.
Market impact
Trump's upbeat response to recession fears
Despite the initial chaos in the markets, President Trump later played it down during a White House event.
"I don't see it at all. I think this country's going to boom," he said, brushing aside concerns of market fluctuations saying they would "go up and they're going to go down."
However, he did warn top executives at a meeting of the Business Roundtable that more tariffs could be coming down the line.
Tariff escalation
Trade war escalates as Canada retaliates
The trade war further escalated when Canada announced plans to retaliate against US tariffs with levies on US dairy products and other goods, plus higher electricity prices.
In return, Trump threatened to double the metals charge on Canada and warned of dramatic additional hikes if Ottawa didn't relent on its protectionist policies intended to protect the country's dairy industry.
He claimed these levies would "essentially, permanently shut down the automobile manufacturing business in Canada."
Diplomatic resolution
Ontario retracts surcharge after Trump's tariff threat
Following Trump's threatened tariff, Ontario Premier Doug Ford and US Commerce Secretary Howard Lutnick announced they would be meeting in Washington, and the province would be suspending its plan for an electricity surcharge.
The announcement caused US stocks to pare losses, although the S&P still closed down on the day.
Market uncertainty
Trump's unpredictable trade war strategy
This isn't the first time Trump's on-again, off-again tariffs have sent the markets swinging.
US stocks have declined sharply since setting a record high about a month after Trump took office on January 20, wiping off nearly $5 trillion in market value from US indexes.
His latest moves have also resulted in a weaker Canadian dollar, with traders ramping up bets Canada's central bank will cut interest rates by a quarter point.