US President Donald Trump has backed down from a planned escalation in trade tensions with Canada, reversing his decision to impose additional tariffs on Canadian steel and aluminum. Initially, Trump had threatened to raise tariffs from 25% to 50% in response to Ontario’s move to impose a 25% surcharge on electricity exports to New York, Michigan, and Minnesota. However, following negotiations, Ontario agreed to withdraw the electricity surcharge, prompting Trump to walk back on his tariff increase.

Speaking to reporters, Trump accused Canada and Mexico of treating the US unfairly, grouping them with the European Union, which he called "horrible." He claimed that a Canadian official had assured him that the electricity tariff would not be implemented. "It would have been a very bad thing if he did. And he's not going to do that, so I respect that," Trump said. Despite backing down from the additional tariffs, he reiterated that the US would push back against what he sees as unfair treatment from trade partners.

The standoff had rattled markets for the second consecutive day, with US Commerce Secretary Howard Lutnick, Canada's Minister of Finance Dominic LeBlanc, and Ontario Premier Doug Ford now set to meet on Thursday to renegotiate aspects of the USMCA trade agreement. The meeting aims to prevent further trade disputes and assess the broader implications of tariffs on both economies.

Before his reversal, Trump had posted on Truth Social, announcing plans to increase tariffs due to Ontario’s proposed electricity surcharge. "Based on Ontario, Canada, placing a 25% Tariff on 'Electricity' coming into the United States, I have instructed my Secretary of Commerce to add an ADDITIONAL 25% Tariff, to 50%, on all STEEL and ALUMINUM COMING INTO THE UNITED STATES FROM CANADA," he wrote. The post drew swift reactions from Canadian officials, with Ontario Premier Doug Ford threatening to cut off electricity exports to the US and Prime Minister-Designate Mark Carney vowing to keep pressure on Washington.

Meanwhile, the European Union announced retaliatory tariffs worth 26 billion euros in response to US tariffs on steel and aluminum. The EU’s counter-tariffs are set to take effect next month.

Trump also used the opportunity to blame his predecessor, Joe Biden, for economic problems, including inflation and illegal immigration. He described the current state of the US as a "mess" and said his administration was working to reverse the situation. "Biden left us tremendous inflation, tremendously high costs of products. He left us a mess, but he also left us a mess with millions of people that poured into our country that are criminals," Trump said. He promised that his administration would restore American economic strength, bring jobs back, and prevent the US from being "plucked at from all over the world."

White House Press Secretary Karoline Leavitt confirmed that Trump has not yet spoken directly with Carney but stated that "his phone is always open to leaders who wish to speak with him."