Ontario Suspends 25% Electricity Surcharge as U.S. and Canada Set USMCA Talks for Thursday
Canada has stepped back from a contentious trade standoff with the United States, suspending a 25% surcharge on electricity exports to New York, Michigan, and Minnesota. The decision, announced Tuesday, comes after a tense day of tariff threats that rattled financial markets and raised fears of an escalating trade war between the two North American neighbors.
CNN reports that the breakthrough followed a flurry of diplomatic activity. U.S. Commerce Secretary Howard Lutnick, Canada’s Minister of Finance Dominic LeBlanc, and Ontario Premier Doug Ford have agreed to meet on Thursday, March 13, to renegotiate the United States-Mexico-Canada Agreement (USMCA), the free trade treaty that governs economic relations across the continent. The meeting aims to address the underlying issues that sparked this latest skirmish and prevent further economic disruption.
The conflict began when Ontario, Canada’s most populous province, imposed the 25% surcharge on electricity exports to the three U.S. states on Monday, a retaliatory move against President Donald Trump’s imposition of 25% tariffs on most Canadian goods—excluding energy, which faced a lighter 10% tariff. Ford had warned that he was prepared to escalate further, even threatening to cut off electricity exports entirely if the U.S. didn’t relent. “They need to feel the pain,” Ford had said earlier this week, highlighting the critical role Canadian energy plays in powering 1.5 million American homes and businesses in the affected states.
Trump Responded with 50% Tariff Threat
Trump responded swiftly on Tuesday morning, threatening to slap a 50% tariff on Canadian steel and aluminum—a sharp escalation that sent markets tumbling for a second consecutive day. The Dow dropped sharply amid fears of a broader trade war, with analysts warning that such tariffs could disrupt supply chains and spike costs for U.S. industries reliant on Canadian metals, including automakers and manufacturers.
However, by Tuesday afternoon, the tone shifted. Trump signaled he might back down from the steel and aluminum tariffs, telling reporters at a White House event, “I’ll let you know,” when asked if the 50% tariffs would proceed. Shortly after, White House senior counselor Peter Navarro confirmed on CNBC that the additional tariffs were off the table for now. Ontario’s suspension of the electricity surcharge followed soon after, suggesting a coordinated de-escalation.
USMCA Will Convene to Make a Deal
The agreement to suspend the surcharge and convene for USMCA talks reflects a mutual recognition of the high stakes involved. Canada is the largest source of U.S. energy imports, supplying 59% of America’s crude oil and a significant share of its electricity, according to the U.S. Energy Information Administration. Meanwhile, the U.S. is a vital market for Canadian exports, making a prolonged trade conflict a lose-lose proposition.
Ford framed the suspension as a goodwill gesture ahead of Thursday’s talks. “We had a productive conversation with Secretary Lutnick about our economic relationship,” he said in a statement, adding that Ontario would hold off on the surcharge pending the outcome of the negotiations. Lutnick, for his part, emphasized the importance of maintaining strong ties with Canada, a key ally and trading partner.
Thrivenews.co will continue to monitor this developing story and provide updates as they emerge.
