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The "6-hour reversal" of the US-Canada trade war: the economic war behind the tariff game

On March 11, 2025, US President Trump used the excuse of "retaliation for the electricity tax in Ontario, Canada" to declare that he would increase the tariff on Canadian steel and aluminum products exported to the United States from 25% to 50%. This move caused a huge shock to the market. But just 6 hours later, White House Chief Trade Advisor Navarro urgently announced the cancellation of the plan. Behind this dramatic reversal, it is not only a microcosm of the US-Canada economic game, but also shows the chaotic and tentative nature of the Trump administration's trade strategy.

Tariff blitzkrieg: from "extreme pressure" to "emergency brake"

Trump's tax increase order can be called a "raid action". On March 11, he announced on the Truth Social platform that he would double the tariffs on Canadian steel and aluminum, and threatened to impose tariffs on auto parts in April if Canada did not compromise. This decision directly impacted the highly integrated industrial chain in North America: Alcoa has 900,000 tons of aluminum production capacity in Canada, and tariffs will cause its costs to soar; automakers have also warned that the cost of each vehicle may increase by $1,500. The market responded quickly, with the three major U.S. stock indexes falling sharply and aluminum prices soaring 10% in a single day.

However, Ford, the governor of Ontario, Canada, immediately announced the suspension of electricity taxes on the United States, and the two sides began emergency negotiations. Six hours later, the White House withdrew the tariff order on the grounds that "the negotiations are progressing smoothly." Analysts believe that Trump did this to appease domestic industries and gain bargaining chips for subsequent negotiations through the routine of "creating crises - pressuring concessions - shaping victory."

The logic of economic mutual destruction: Who is more dependent on whom?

This game exposes the fatal symbiotic relationship between the U.S. and Canadian economies. 15% of the electricity in the northeastern United States relies on Canada. If Canada cuts off power supply, local electricity prices will soar by 20%; and 75% of Canada's steel and aluminum exports rely on the U.S. market. Losing orders is like economic suicide. Trump has repeatedly stated that "Canada will become the 51st state" and tried to force Canada to surrender with military protection and economic ties, but it has aroused anti-American sentiment among all Canadians. The Trudeau government has even accelerated the promotion of domestic market integration and European trade agreements in an attempt to get rid of its dependence on the United States.

The "boomerang effect" of the industrial chain: hurting the enemy 800 times and hurting oneself 1,000 times

Trump's tariff policy has been accused of "shooting himself in the foot". After 30 years of integration of the North American automotive industry chain, cross-border circulation of parts has become the norm. Imposing tariffs on Canada will sharply increase the costs of American automakers and weaken their competitiveness. Alcoa warned that if tariffs are implemented, 100,000 jobs may be lost and market share will be seized by Middle Eastern companies. This "suicidal trade war" was even criticized by former US Treasury Secretary Summers as "the worst policy" and may drag the US economy into recession.

Future game: temporary compromise or greater crisis?

Although the two sides have temporarily eased the conflict, the deep-seated contradictions have not been resolved. The Trump administration still requires Canada to accept the revised version of the US-Mexico-Canada Agreement to promote the transfer of the industrial chain to the United States; Canada is accelerating the development of the European and Asian markets. Historical experience shows that Trump's "art of deal" is often accompanied by capriciousness-since February, he has postponed, adjusted, and revoked tariffs on Canada as many as five times, and the swing in policy has seriously damaged the confidence of enterprises.

Conclusion: This farce of a six-hour reversal is essentially a fierce collision between the economic dependence of the United States and Canada and political games. Although Trump's "tariff stick" worked for a short time, it exposed the fragility of the US industrial chain. If the United States and Canada cannot establish a stable trade framework, this "roller coaster" crisis may become the norm, and eventually the economies of both countries will suffer. #Trade surplus and deficit# #International trade drive# #US-Canada trade war#