President Donald Trump dialed back his latest trade-war threat against Canada hours after making it, while downplaying the risk of a tariff-led recession that’s sent US markets into a nosedive.
Trump’s roller-coaster day saw him threaten to double duties on Canadian steel and aluminum to 50% after Ontario announced plans to place a surcharge on electricity sent to the US, only to retreat back to plans for his previously announced 25% rate after the provincial government backed down.
The episode rattled markets already bracing for the worldwide metal levies set to hit at midnight, and encapsulated the frantic and mercurial tariff barrage that has spooked investors and befuddled corporate leaders over the past six weeks. Major stock indexes were down some 10% off their peaks amid escalating concerns that the world’s biggest economy may be about to stall. Trump himself fueled the recession talk as recently as Sunday, declining to rule out the possibility in a Fox News interview.
At the White House late Tuesday, he struck a more upbeat note when asked if he was worried about a downturn. “I don’t see it at all. I think this country’s going to boom,” he said. And he played down the markets slump, too. They’re “going to go up and they’re going to go down,” Trump said. “Doesn’t concern me.”
Still, only hours later he told top executives gathered at a meeting of the Business Roundtable to brace for more tariffs, saying rates could even go higher. The president said increased levies simply meant it was “more likely” companies would move their operations inside the US.
“The biggest win is not the tariff — that big win is a lot of money — but the biggest win is if they move into the country and produce,” Trump said.
He told the executives that he’s putting a priority on speedy approvals, particularly regarding environmental regulations, and planned to soon announce a major electricity project, according to a person familiar with the session. He also reiterated a suggestion that a company’s business taxes could be reduced if it manufactured its products in the US.
The White House did not immediately respond on Tuesday night to a request for comment on Trump’s remarks.
While other Trump policies could threaten US growth too, including the threat of mass deportations and Elon Musk’s moves to slash federal jobs and spending, the escalating trade war has been front and center of risk assessments. Economists say it will hike prices for consumers; retaliation will hurt US exporters; and all of this could add up to a drag on growth.
The three chief targets so far – China, Mexico and Canada – are the biggest US trade partners. On Tuesday, it was the latter that found itself in the crosshairs.
Apparently angered by Canada’s plans to retaliate, with tariffs on US dairy products and other goods plus higher prices for electricity exports, Trump threatened to double the metals charge on his northern neighbor. He also warned of dramatic additional hikes if Ottawa didn’t relent on some of its own protectionist policies intended to protect the country’s dairy industry.
The coming levies would “essentially, permanently shut down the automobile manufacturing business in Canada,” Trump said.
A few hours later, Trump’s Commerce Secretary Howard Lutnick and Ontario Premier Doug Ford announced plans to meet Thursday in Washington, and that the province would suspend its plans to slap a surcharge on electricity.
“When you’re negotiating with someone and they’re not paying attention and they disagree, the president, who is the best dealmaker ever, has to say, ‘Here’s my response,’” Lutnick said in an interview with CBS News.
US stocks pared losses after that, but the S&P still closed down on the day, extending this week’s loss to around 3.5%, while treasuries also fell.
It’s likely only a respite in the trade-war escalation, with the 25% charge on imports of steel and aluminum set to hit at midnight, and a whole wave of them lined up next month. That includes “reciprocal” duties – matching what the US sees as trade barriers imposed by other countries – and separate tariffs on a wide range of specific products, from autos and semiconductors to lumber.
Asian shares rose in early trade on Wednesday after Trump played down recession fears. But Australian equities fell, with the benchmark S&P/ASX 200 index hovering near a correction, after the US ruled out an exemption from steel and aluminum tariffs despite a lobbying campaign by Australian Prime Minister Anthony Albanese.
It’s the shifting and unpredictable nature of Trump’s second-term trade war — and the extent that decisions rest on the whims of the president — that’s proving especially disruptive for industry and markets. Tuesday wasn’t the first time he has whipsawed markets with on-again, off-again tariffs.
Source: https://finance.yahoo.com/news/trump-says-doubling-tariffs-canadian-142100812.html