Trump drops threat to double Canada tariffs, sees no recession

Donald Trump blamed the recent stock market turbulence on the previous administration, arguing he was not concerned and would press ahead with plans to rebuild American industry.

After threatening an escalation of his trade war with Canada, President Trump has signalled he would likely step back from his threats of 50 per cent tariffs against Canada and said he did not see a recession on the horizon.

He blamed the stock market turbulence of recent days on the previous administration, arguing he was not concerned and would press ahead with plans to rebuild American industry.

“I don’t see it (a recession) at all,” Mr Trump said. “I think this country is going to boom. But, as I said, I can do it the easy way or the hard way. The hard way to do it is exactly what I’m doing, but the results are going to be 20 times greater. And remember Trump is always right.”

Appearing at the White House with Elon Musk, Mr Trump said that Ontario – Canada’s largest province – would no longer be applying a 25 per cent surcharge on the electricity it provided to America after discussions were held between Mr Ford and US Commerce Secretary, Howard Lutnick.

Appearing at the White House with Elon Musk, Mr Trump said that Ontario – Canada’s largest province – would no longer be applying a 25 per cent surcharge on the electricity it provided to America after discussions were held between Mr Ford and US Commerce Secretary, Howard Lutnick

“There’s a very strong man in Canada who said he was going to charge a surcharge or a tariff on electricity coming into our country,” Mr Trump said. “He has called and he said he’s not going to do that. And it would have been a very bad thing.”

Earlier on Wednesday (AEDT) the US President posted multiple times to his Truth Social platform on Tuesday morning local time. “Can you imagine Canada stopping so low as to use ELECTRICITY, that so affects the life of innocent people, as a bargaining chip and threat?” he said. “They will pay a financial price for this so big that it will be read about in History Books for many years to come.”

Holding a press conference earlier in the day, Mr Ford said that – after speaking with Mr Lutnick – he had agreed to temporarily suspend the 25 per cent surcharge on electricity provided by Ontario to the United States.

Mr Ford said that Mr Lutnick offered an “olive branch” in the form of an invitation to “come down and immediately meet with him, meet with the whole trade administration and discuss the future.”

“I’ll be heading down to Washington along with (Canadian Finance Minister) Dominic LeBlanc and we’ll have a good discussion,” Mr Ford said. “I thought this was the right decision. They understand how serious we are about the electricity and the tariffs … We have both agreed that cooler heads prevail. We need to sit down and move this forward.”

Asked whether the United States would now drop plans to double the 25 per cent tariff on Canadian steel and aluminium in return, Mr Ford replied: “I’m pretty confident he will pull back.”

Mr Trump also signalled he would cancel the threatened tariff increase when asked about it at the White House, responding: “Probably so. He (Mr Ford) was a gentleman.”

Donald Trump and Tesla CEO Elon Musk speak to the press as they sit in a Tesla vehicle on the South Portico of the White House. Picture; AFP.

The US President appeared at the White House to support Mr Musk whose company Tesla was the subject of a major sell-off on Monday, with its share price plunging 15 per cent. Mr Trump committed to buying a Tesla with the five of them being arranged in a row in front of the South Portico – including one Cybertruck.

“I just want people to know that you can’t be penalised for being a patriot,” Mr Trump said. “And he’s a great patriot. And he’s also done an incredible job with Tesla.”

He argued that Mr Musk was being punished economically by a “small group of people” who were angered by the waste and fraud he was uncovering in the US government through the efforts of the Department of Government Efficiency.

Mr Trump continued to defend his economic agenda, saying that “markets are going to go up and they’re going to go down” but that he was committed to a new effort to “rebuild our country.” He warned that free trade agreements had seen American industry hollowed out.

“This economy, in my opinion, is going to blow it away. But what I have to do is I have to get the workers back. I have to get the factories open,” he said. “We have 90,000 factories and plants are closed from what you had just prior to NAFTA, which is not very long ago, 90,000 think of it.”

Pressed on whether his tariff policies were to blame for falling US stocks, Mr Trump said that former President Joe Biden had passed on a “horrible economy. He gave us horrible inflation, and I think the market was going to go very, very bad.”

Mr Trump said businesses were now investing because of his longterm plans to make America stronger. “I have tremendous confidence in this country and the people of this country.”

US stocks did not react well to the threat of escalation by Mr Trump, with the S & P 500 and Dow Jones Industrial Average both declining just one day after recession fears sparked a major sell-off on Monday.

Ontario Premier Doug Ford announced that the provincial government applied a 25 per cent surcharge on all electricity exports to the United States as part of retaliatory tariff measures. Picture: Getty Images via AFP

The incoming Canadian Prime Minister, Mark Carney, had said that Mr Trump’s latest tariffs were “an attack on Canadian workers, families and businesses”.

“My government will ensure our response has maximum impact in the US and minimal impact here in Canada, while supporting the workers impacted,” he said.

“My government will keep our tariffs on until the Americans show us respect and make credible, reliable commitments to free and fair trade.”

America remains poised to move ahead with its plan to impose 25 per cent across-the-board tariffs on steel and aluminium from March 12.

In addition, Mr Trump threatened to permanently shut down Canada’s domestic automobile manufacturing business by “substantially” increasing tariffs planned from April 2.

Ontario is the largest Canadian province and home to the local automotive industry, with Mr Ford vowing to wage a “maximum pressure” campaign against America until Mr Trump withdrew his tariffs.

White House refuses to rule out recession

Mr Trump spooked the markets over the weekend by refusing to rule out a recession when he was asked on Fox News, but on Tuesday it became clear this was a deliberate decision.

On Wednesday, White House press secretary Karoline Leavitt again refused to rule out a recession when she was pushed by reporters in the Briefing Room.

“When it comes to the stock market, the numbers that we see today, the numbers we saw yesterday, the numbers we’ll see tomorrow, are a snap shot of a moment in time,” Ms Leavitt said.

“We are in a period of economic transition from the mess that was created under Joe Biden in the previous administration. Joe Biden left this country in an economic disaster … So we are in a period of transition from that economic nightmare under a president who had no idea what he was doing, never held a private sector job in his life, into a golden age of American manufacturing.”

Ms Leavitt also said that Mr Trump had not yet spoken to Mr Carney, but provided an assurance that the US President’s “phone is always open to leaders who wish to speak with him”.

White House Press Secretary Karoline Leavitt holds up a piece of paper with information about tariff rates while speaking during the daily briefing in the Brady Briefing Room of the White House in Washington, DC, on March 11. Picture: AFP.

She said the increased tariffs were a response to the “rhetoric that we’ve seen out of Ontario Canada.”

“The President saw the Premier, Doug Ford, make an egregious and insulting comment threatening to shut down electricity for the American people, for hard working American families. He made that threat,” Ms Leavitt said.

“The President saw that and has an obligation and a responsibility to respond accordingly and represent the interests of the American people.”

“Canada has been ripping off the United States of America and hard-working Americans for decades,” she said. “There would be grave consequences imposed on Canada if they think about shutting off electricity for the United States of America and our citizens and the president is also determined to ensure that.”

Ms Leavitt encouraged Americans to “think about what the tariff policy long term will do for our country.”

“What the President envisions for this country is for the United States of America to be a manufacturing superpower where there are American factories and businesses owned by Americans producing foods that we are exporting to the rest of the world,” she said. “Those revenues will stay here. It will increase wages for people here in our great country. It will ensure our national security and it will boost the morale of the American people to have thriving industries.”

Canada's incoming Prime Minister Mark Carney speaks after being elected as the new Liberal Party leader, in Ottawa on March 9, Picture: AFP

Mr Ford was re-elected as Ontario Premier last month on an aggressive platform of retaliation and the projection of strength in the face of the US tariff threat, with the Premier last week saying he was willing to completely shut off power to America “with a smile on my face.”

Speaking at a press conference on Monday local time, Mr Ford said his 25 per cent electricity surcharge would cost US businesses and residents in each of the three US states up to $400,000 per day and increase the average power bill by about $100 per month.

“Until these tariffs are off the table, until the threat of tariffs is gone for good, we will not relent,” he said.

“Pausing some tariffs, making last-minute exemptions, it won’t cut it. We need to end the chaos once and for all.”

Mr Ford again made clear he would “not hesitate to shut the electricity off completely” or increase the 25 per cent surcharge in the event of further tariffs being imposed by Mr Trump, with the US President threatening to do that on Tuesday morning local time.

“Based on Ontario, Canada, placing a 25 per cent Tariff on “Electricity” coming into the United States, I have instructed my Secretary of Commerce to add an ADDITIONAL 25 per cent Tariff, to 50 per cent on all STEEL and ALUMINIUM COMING INTO THE UNITED STATES FROM CANADA, ONE OF THE HIGHEST TARIFFING NATIONS ANYWHERE IN THE WORLD,” Mr Trump said.

“This will go into effect TOMORROW MORNING, March 12th. Also, Canada must immediately drop their Anti-American Farmer Tariff of 250 per cent to 390 per cent on various U.S. dairy products, which has long been considered outrageous.”

Mr Trump said he would “shortly be declaring a National Emergency on Electricity within the threatened area. This will allow the US to quickly do what has to be done to alleviate this abusive threat from Canada.”

If Canada did not drop its “egregious tariffs” against the US, Mr Trump said that from April 2 he would substantially increase the US tariffs on cars coming into America and “permanently shut down the automobile manufacturing business in Canada.”

“Those cars can easily be made in the USA! Also, Canada pays very little for National Security, relying on the United States for military protection. We are subsidising Canada to the tune of more than 200 Billion Dollars a year. WHY??? This cannot continue,” Mr Trump said. The US President said the “only thing that makes sense” was for Canada to become our “cherished Fifty First State.”

“This would make all Tariffs, and everything else, totally disappear. Canadians’ taxes will be very substantially reduced, they will be more secure, militarily and otherwise, than ever before, there would no longer be a Northern Border problem, and the greatest and most powerful nation in the World will be bigger, better and stronger than ever,” he said.

“And your brilliant anthem, “O Canada,” will continue to play, but now representing a GREAT and POWERFUL STATE within the greatest Nation that the World has ever seen!”