From doubling tariffs to retreating by Donald Trump, a strange day in the global aluminium industry

US President Donald Trump is keeping the global aluminium market on edge for sure with his eccentric decisions on tariffs. For the first time in history, a single day saw both the announcement and the reversal of tariffs. On Tuesday, March 11, the President announced his plan to double tariffs on Canada to 50 per cent, with immediate effect—only to retract his decision moments later. Why at all did Mr President decide to raise tariffs, escalating the ongoing trade tensions with his neighbouring country, and then what led him to backtrack so quickly?

Donald Trump's decision to double aluminium tariffs on Canada followed Ontario's announcement to place a 25 per cent surcharge on electricity, a move that could serve as a hurtful retaliatory measure potentially impacting three big US states: Minnesota, Michigan, and New York. Ontario is a populous province in east-central Canada that supplies electricity to about 1.5 million US homes.

In announcing the bold move, Trump also directed his Commerce Secretary Howard Lutnick to bring the additional 25 per cent tariffs on aluminium and steel imports from listed countries into effect. Additionally, Trump threatened to impose much higher import tariffs on cars originating from Canada in response to Canada's trade protections on US dairy and agricultural products exports.

But then, within a few hours after announcing these multiple moves, the US President retreated on his decision. Why? The answer lies in a significant market backlash, with all three major indexes experiencing sharp declines following the double tariff announcement. The Dow closed lower by 478 points, or 1.14 per cent, the broader S&P 500 fell 0.76 per cent and the Nasdaq Composite inched down 0.18 per cent. Trump's tariff actions, intended to strengthen the domestic metal market, are instead causing financial turmoil, potentially reigniting inflation, and unsettling business leaders, raising concerns about the potential impact on trade. Even the effect is seen in the Toronto Stock Exchange's S&P/TSX Composite index falling by about 0.6 per cent and the Canadian dollar decreasing to a one-week low.

Businesses ranging from airlines to department stores are of the opinion that Trump's fast-shifting trade policies are starting to have a chilling effect across many industries. Sensing the downside risk to the economy, Donald Trump is set to meet 100 chief executives of the US firms to discuss the potential repercussions.

At the same time, Ontario Premier Doug Ford has agreed to remove the electricity surcharge in response to Donald Trump's decision to stall the double tariff plan.