WASHINGTON −
President Donald Trump
Peter Navarro, a top advisor at the White House focusing on trade and manufacturing issues, announced on Tuesday that they have reversed their stance and will no longer be doubling tariffs on steel and aluminum imported from Canada.
The sudden change was in reaction to Ontario Premier Doug Ford stating he would
impose a 25% surcharge on electricity costs
Regarding approximately 1.5 million energy consumers in New York, Michigan, and Minnesota.
Trump
He had suggested the change on Tuesday evening, and Navarro verified it, stating that Ford and Commerce Secretary Howard Lutnick “engaged in a friendly conversation, during which Mr. Ford, with great insight, chose to withdraw his proposed 25% charge on electricity.”
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Navarro also mentioned that Ford “realized this wasn’t a battle he could triumph in.”
After initially stating on Tuesday morning that he would increase tariffs on Canadian steel and aluminum imports from 25% to 50%, effective as of Wednesday, Trump reversed his position. Consequently, the tariff rate for these imports from Canada will stay at 25%.
Trump minimized the effect of his tariff threats on the
plunging stock market
He contends that the tariffs are essential for revitalizing America’s manufacturing industry.
“The markets will rise and fall, but we must focus on rebuilding our nation,” Trump stated to journalists assembled at the White House South Lawn while endorsing Tesla cars along with Elon Musk, Tesla’s CEO and a top White House advisor.
Trump supports tariffs and implies they could go up.
Trump defended his use of tariffs in remarks Tuesday to business leaders in Washington following another day of tariff threats and a sudden reversal – and suggested higher fees could be on the way.
Speaking before
The Business Roundtable
, Trump highlighted a “revived vigor” in the U.S. manufacturing industry due to his import tariffs, despite the new taxes causing a downturn in the stock market.
They aren’t willing to pay 25%, or however much it might end up being,” Trump stated regarding businesses, commenting on the tariff rate he aims to impose on goods coming from Canada and Mexico along with all steel and aluminum imports. “The rate could increase further. The higher we push it, the greater the likelihood that these companies will start manufacturing within the U.S.
The previous week, Trump consented to delay the tariffs on imports from Mexico and Canada until early April. These tariffs pertain to items covered under the USCMA—a free trade agreement he had signed in 2019. The affected products constitute 50% of Mexican merchandise entering the US and 38% of Canadian goods.
Shares end down following a day marked by significant volatility.
On an eventful day of trading, U.S. equities changed direction towards the end of Tuesday when Ford announced plans to halt the proposed electricity charge. Although stocks finished down, they managed to reduce their significant initial declines. These sharp drops had been sparked first by Ford’s warning about imposing a 25% levy on electricity for consumers in three neighboring states, and subsequently by Trump threatening to double import duties on Canadian steel and aluminum as retaliation.
The S&P 500 finished lower by 0.76%, decreasing by 42.49 points to close at 5,572.07. The blue-chip Dow Jones dropped 1.14%, losing 478.23 points to end up at 41,433.48. After experiencing its biggest decline since last September on Monday, the technology-focused Nasdaq fell slightly by 0.18% or 32.23 points, finishing at 17,436.10. Meanwhile, the benchmark 10-year yield went up to 4.284%.
Rising concerns about an economic downturn alongside elevated inflation.
Stock market fluctuations due to increasing trade actions, such as tariffs imposed on both Mexico and China, have led several economists to worry about an approaching recession along with the potential resurgence of higher inflation rates, which continue to persistently exceed the Federal Reserve’s target of 2%.
Trump would not rule out an economic slowdown in an interview that aired over the weekend. “I hate to predict things like that. There is a period of transition because what we’re doing is very big,” Trump said in an interview that aired on “Sunday Morning Futures With Maria Bartiromo.”
Multiple firms — including major retailers like Walmart, Kohl’s, and Dick’s Sporting Goods along with airlines such as Delta and Southwest — have stated they’re preparing for potential reduced consumer expenditure. Consumer spending makes up roughly 70% of economic activity. Recent polls indicate declining optimism among consumers.
The optimism among small businesses has taken a hit as well. According to the National Federation of Independent Business Small Business Optimism Index, confidence levels have dropped with growing doubt about future prospects. This skepticism pushed their Uncertainty Index up to the second highest mark since records began in 1973.
The report is anticipated to indicate modestly elevated consumer prices.
Thursday’s highly anticipated February inflation report is expected to offer some mild respite, but this easing could be short-lived as President Trump’s intensifying trade conflict is likely to push costs up further towards the end of the year.
The general consumer price index probably went up by 0.3% last month, based on the median forecast of economists polled by Bloomberg. This increase would be significant yet smaller compared to January’s 0.5% growth, potentially reducing the yearly inflation rate from 3% down to 2.9%, which remains over the Federal Reserve’s target of 2%.
Economists anticipate that a key inflation metric, which omits fluctuating food and energy components, probably increased by 0.3%, slightly lower than last month’s rise of 0.4%. This could bring the annual growth rate down from 3.3% to 3.2%. Forecasters suggest that the rising prices may stem from typical factors like pre-owned vehicles, automobile insurance, and egg costs.
Although most of Trump’s tariffs have yet to take effect, they’re already affecting businesses’ pricing decisions and pushing some costs higher, Wells Fargo wrote in a note to clients.
− Paul Davidson
Ontario leader: Trump initiated an ‘unjustified assault’
Ford said Tuesday that Trump launched an
“unprovoked attack”
When he raised the steel and aluminum tariffs in Canada.
We won’t retreat. We’ll stay persistent,” Ford stated on MSNBC. “I regret that President Trump chose to launch an unjustified assault on our nation, affecting families and employment opportunities. This is completely unacceptable.
Ford stated that chief executives ought to attempt altering Trump’s opinion.
“You see the market tumbling. Consumer confidence is down,” he said. “And if he continues on with this, assembly plants in Michigan will shut down, and around the country, whoever makes autos, and as well as businesses, they’re going to hurt.”
The White House plays down the drop in the stock market.
The White House press secretary, Karoline Leavitt, minimized the declining stock market by calling it “a single frame in an evolving sequence” and attributed the continuous economic instability to ex-President Joe Biden, despite the fact that it was Trump’s trade policies that have unsettled Wall Street.
“We are currently experiencing an economic shift,” Leavitt stated during a Tuesday press briefing.
Since President Trump took office on January 20th, the Dow Jones Industrial Average has dropped by 3.6%, whereas both the S&P 500 and Nasdaq indexes have also negated their post-election increases. Similar to Trump, Leavitt didn’t dismiss the possibility of an upcoming recession but expressed optimism about the economy during Trump’s current term in office.
“Examine President Trump’s achievements during his initial term. Those seeking stability ought to consider the track record of this presidency,” stated Leavitt.
Which products will see higher prices for U.S. shoppers?
Tariffs are expected to disturb supply chains and boost transportation costs, resulting in an increase in prices for nearly every product.
Truist
chief of U.S. economics Mike Skordeles
previously told USA TODAY
.
“Generally speaking, increased tariffs will raise the cost of imports, compelling businesses to decide whether they should absorb the reduction in profit margins or pass these additional expenses onto customers,” explained Madhav Durbha, a supply chain specialist and group vice president for consumer packaged goods and manufacturing.
RELEX
In either scenario, this leads to increased inflation and reduces consumer expenditure, affecting both single businesses and the overall economy.
As previously reported,
the
U.S. auto industry
And a wide range of usual goods imported from Canada to the U.S. might be impacted by these tariffs, as stated in the analysis.
Bureau of Industrial and Safety
and
Trading Economics
For customers, this might result in increased costs for devices, breakfast cereals, dairy items, alcoholic drinks, and other goods.
American steel manufacturers support import duties.
Not everyone is bothered by Trump’s tariffs. The ones applied to steel are “definitely beneficial” for American steel manufacturers, according to Philip K. Bell, who serves as the president.
Steel Manufacturers Association
.
In 2023, the U.S. generated 90 million tons of steel, placing it in the fourth position globally following China, India, and Japan, as reported.
worldsteel.org
However, Bell mentioned that American manufacturers are weary of imported steel eroding their profit margins due to past tariffs and exemptions, and Trump aims to “even out the competition.”
“Bell mentioned that the president grasps the significant impact of tariffs and how these measures can substantially alter our trade relationships, which have previously disadvantaged America in terms of value,” he explained.
He mentioned that Mexican businesses were bringing in inexpensive steel from China, modifying it somewhat, and then shipping it to the U.S. as though it had been manufactured in Mexico. He further stated
Biden administration
Last year, an attempt was made to address this issue by imposing a 25% tariff on Mexican steel that was melted or cast outside of North America prior to becoming a finished good. However, according to Bell, this measure did not suffice.
For an extended period, these Mexican firms exploited legal gaps permitting other nations to flood our market with their steel,” Bell stated. “Now it’s essential to put an end to this practice.
− Terry Collins
Canadian business executive: Tariffs ‘diminish us both’
Candace Laing, who serves as both the president and CEO of the Canadian Chamber of Commerce, described the U.S.’s decision to impose 50% tariffs on steel and aluminum as “extremely damaging.”
This chain of escalating events will soon reach a peak where both Americans and Canadians are poised to experience significant pain,” Laing stated. “The fluctuating stock market clearly indicates that this economic turmoil needs to come to an end.
She mentioned that comparable tariffs imposed on steel and aluminum during Trump’s initial term resulted in a net loss of tens of thousands of American blue-collar positions.
Strength lies in steel and aluminum; however, these tariffs only serve to undermine us both,” Laing stated. ” President Trump might as well surrender North America’s dominance in steel and aluminum production to China.
− Sarah D. Wire
Housing costs pushed higher
For a country confronting a
housing affordability crisis
, an intensifying trade war arrives at an inopportune moment. As USA TODAY
previously reported
An initial set of tariffs suggested for Canada, Mexico, and China would have increased the price of the average new home by approximately 5%, equating to around $21,000.
According to an analysis conducted by an industry consultant, nearly three-quarters of the sawmill wood products that are imported come from Canada. Additionally, Canada provides approximately 11% of the hardware utilized in home building projects.
What defines a recession? And is the US nearing one?
With the stock market tumbling, consumer confidence skidding and U.S. companies ramping up layoffs, it may look like the nation is
hurtling toward a recession
In light of the expanding global trade war under Trump and impending federal layoffs.
It hasn’t happened—yet. This is largely due to U.S. consumers maintaining strong finances and businesses across the country staying relatively positive, even with increasing uncertainties surrounding trade disputes and potential federal budget reductions, according to analysts.
A downturn is casually deemed as occurring when there are at least two consecutive quarters with decreasing economic production. However, the official description from the non-profit organization National Bureau of Economic Research defines it as “a considerable reduction in economic activity that affects the entire economy and persists for longer than several months.”
This metric takes into account employment, income levels, consumer expenditure, and industrial output, along with several additional factors. A significant economic downturn often involves massive layoffs totaling hundreds of thousands or even millions of jobs lost.
− Paul Davidson
Airline companies revise profit forecasts due to ongoing ‘uncertainty’
On Tuesday, additional U.S. airlines reduced their profit forecasts, aligning with Delta Air Lines’ actions and pointing to growing economic instability causing a reduction in both business and personal expenditures. United Airlines announced that due to a 50% decline in government-associated travel reservations, they anticipate their first-quarter profits will be toward the bottom range of what was previously projected.
“Uncertainty about the economy is significant,” American Airlines CEO Robert Isom stated during a J.P. Morgan sector conference.
Canada may now be seen as a U.S. competitor, according to the White House.
Unfavorable attitudes from Canadian consumers toward U.S. goods have emerged, with American alcohol, wine, and spirits being the initial focus of this backlash.
Numerous Canadian retailers have started removing American alcoholic beverages from their shelves as part of countermeasures against President Trump’s tariffs imposed on Canadian goods, though these actions will be paused until at least April 2nd. The producer behind Jack Daniel’s described the delisting of his brand’s whisky from Canadian outlets as even more detrimental than facing additional taxes directly.
At a media briefing on Tuesday, when asked whether Canada remains a close ally, White House press secretary Karoline Leavitt characterized the nation as a neighbor and a collaborator. She stated, “Canada has consistently been an ally of ours.” However, she added, “It’s possible that they might be transitioning into more of a rival now.”
She likewise restated Trump’s outlandish wish for Canada to become part of the U.S. as a state, a notion that Canadian officials reject. “He thinks that Canadians would immensely profit from joining the United States as its 51st state,” she stated.
Leavitt stated that Trump hasn’t yet had a conversation with Mark Carney, who is slated to succeed Justin Trudeau as Canada’s prime minister following his victory in the Liberal Party elections on Sunday.
– Betty Lin-Fisher and Joey Garrison
Trump pushes for annexation of Canada
Trump on Tuesday once again expressed his desire to see the U.S. absorb its northern neighbor. In recent months, Trump has repeatedly suggested he wants to annex Canada and
has mentioned its departing prime minister
As “Governor Justin Trudeau of the Great State of Canada” — much to the frustration of Trudeau and numerous Canadians.
“The only logical step is for Canada to join as our beloved fifty-first state. If this happens, all tariffs and every other barrier would completely vanish,” Trump stated on Truth Social.
Trump’s overtures were
panned by Carney
On Sunday during his initial address following his victory as the leader of the ruling Labor Party.
Carney stated emphatically that “under no circumstances will Canada ever become part of America in any manner whatsoever,” and went on to say that this assurance does little to alleviate concerns among Canadians who fear for their nation’s future due to President Trump’s threats and an increasingly fragmented and perilous global landscape.
Undeterred, Trump posted on his social media platform on Tuesday that with Canada becoming part of the U.S., “the greatest and strongest country in the world will become even larger and more powerful – and Canada will play a significant role in this.”
“The artificial divide established decades back will vanish at last, and we will possess the safest and most splendid nation globally,” he penned.
Trump’s “miracle” economy struggles at the start.
Trump
pledged during his 2024 campaign to supercharge the economy, asserting he would perform a “miracle” leading to unprecedented growth. Speaking at an event in Grand Rapids, Michigan, just one day prior to the election,
Trump
forecasted that his pledged triumph would quickly boost employment opportunities and thicken purses.
“One day… maybe even just half a day … away from securing the finest job opportunities, the most substantial salaries, and an unprecedentedly bright economic horizon for our nation,” proclaimed the outgoing yet soon-to-return Republican leader. The audience waved banners with messages like “Think Big. Once More!” and “Trump Will Set It Right.”
Currently – almost two months into President Trump’s second term – his administration is preparing Americans for potential economic upheaval.
last year’s
campaign rhetoric
collides with the reality
of an increasingly
uncertain economy
.
Read more here
.
−
Zac Anderson
Taxes on goods coming from China might intensify issues.
Organizations representing makers of generic drugs along with hospital pharmacists have cautioned that tariffs on products from China might affect both the pricing and availability of medications.
China ranks as one of the biggest providers of components utilized in generic medications. These generic drugs cost less than their branded counterparts, leading manufacturers to source drug ingredients from sizable facilities in China and India, where production costs are lower compared to those within the United States. Approximately 90% of prescriptions filled in the U.S. consist of generic versions.
The Association for Accessible Medicines, which represents makers of generic drugs, cautioned that these tariffs might lead to an escalation in medication shortages. Additionally, the American Society of Health-System Pharmacists pointed out that the additional expenses due to tariffs, along with inflationary surcharges imposed on pharmaceutical firms under the Biden administration for increasing their prices beyond the inflation rate, could worsen drug scarcity issues.
−
Ken Alltucker
Government shutdown also lurks
In light of economic downturn worries, people in America are
yet again bracing
for a possible
government shutdown
Congress must pass funding legislation by 11:59 p.m. this Friday to keep the government running. If not, most of the federal operations will shut down.
Federal workers will not receive their paychecks.
or face being compelled to cease work as many governmental operations shut down.
House Republicans
unveiled a spending bill
Backed by Trump, this measure ensures the government operates until September 30th. A vote on the legislation, referred to as a continuing resolution, is anticipated later today. However, it remains uncertain if the bill will garner sufficient backing to be approved by the House. Certain Democratic members
have already spoken out
against it.
−
Sudiksha Kochi
Contributing: Reuters
The article initially appeared on USA TODAY:
Trump changes stance, decides not to increase duties on certain Canadian imports: Live trade war developments
