Unpredictable! Why did the United States withdraw the additional 25% tariff on Canadian steel and aluminum?
The US decision to withdraw the additional 25% tariff on Canadian steel and aluminum products is the result of a compromise between the US and Canada after the game in the electricity surcharge dispute. Combined with the search results, the reasons behind this policy reversal can be summarized as follows:
I. Ontario, Canada canceled the electricity surcharge, and the US achieved its initial goal
1. Direct trigger: electricity surcharge dispute
On March 10, Ontario, Canada announced that it would impose a 25% surcharge on electricity exported to New York, Michigan and Minnesota in the United States on the grounds of "unfair balance of trade." This move was regarded as an "electricity tariff" by the Trump administration, and it quickly retaliated by imposing additional steel and aluminum tariffs.
On March 11, Trump announced an additional 25% tariff on Canadian steel and aluminum products, raising the total tax rate to 50%, which is scheduled to take effect on the 12th.
However, after Ontario Governor Ford spoke with US Commerce Secretary Lutnick, Canada agreed to suspend the electricity surcharge, and the US immediately withdrew the additional tariffs.
2. The US strategy of "threatening to compromise"
The US threatened to impose higher tariffs (50%) to force Canada to make concessions on the electricity surcharge. White House spokesman Kush Desai made it clear that the premise for withdrawing tariffs is that Canada cancels the electricity surcharge, and emphasized that the US's 25% steel and aluminum tariffs on other trading partners will still be implemented.
II. The deep game and economic dependence of the US-Canada trade war
1. The importance of steel and aluminum trade to the US and Canada
Canada is the largest source of steel imports for the United States, accounting for nearly a quarter of the total US steel imports. If the high tariff of 50% is maintained for a long time, it will impact the US manufacturing supply chain, especially the automotive industry.
The United States is also significantly dependent on Canadian aluminum, and Canada is the main supplier of primary aluminum metal to the United States.
2. The risk of "tit-for-tat" trade confrontation between the two sides
Canada has previously stated many times that it will impose retaliatory tariffs on the United States. For example, Canada's new leader Mark Carney has made it clear that he will maintain countermeasures against the United States until the United States "respects Canada." If the US continues to escalate tariffs, it may trigger further countermeasures from Canada in the fields of automobiles, energy, etc., exacerbating the economic contradictions between the two countries.
III. Domestic political and economic pressures in the United States
1. The policy vacillation of the Trump administration
Trump is accustomed to the "threat-negotiation-withdrawal" model in tariff policy. For example, when announcing a 25% tariff on all imported steel and aluminum on February 10, he emphasized "no exceptions", but eventually adjusted the policy due to Canada's compromise. This repetition is not only to show a tough stance, but also to reserve space for subsequent negotiations.
2. Avoid exacerbating regional conflicts
The three northern states of the United States (New York, Michigan, and Minnesota) are highly dependent on Canadian electricity imports. If the electricity surcharge exists for a long time, it may push up local energy costs and cause voter dissatisfaction.
IV. Potential conflict points in the future
Although the crisis has been temporarily alleviated, the root causes of US-Canada trade frictions have not been eliminated:
1. Trump threatened that if Canada does not cancel other "unfair tariffs", the United States will increase Canadian auto tariffs on April 2.
2. The new Canadian government insists on a tough stance, refuses to become the "51st state" of the United States, and emphasizes sovereignty and independence.
3. The 25% steel and aluminum tariffs imposed by the United States on other trading partners will remain in effect, which may trigger a global chain reaction.
The direct reason for the United States to withdraw its additional tariffs on Canada is Canada's compromise on the issue of electricity surcharges, but the deeper factor lies in the high dependence of the economies of both sides and the potential risk of a trade war. The Trump administration has achieved short-term goals through "extreme pressure", but the long-term trade relationship between the United States and Canada is still facing uncertainty, especially the threat of automobile tariffs and the tough stance of the new Canadian government may become the focus of the next round of conflict.
