US stock markets closed lower, but pared their steep losses in the afternoon, after Ontario Premier Doug Ford agreed to suspend a 25% surcharge on electricity imports to Michigan, New York and Minnesota.
The backpedaling came after President Donald Trump ordered on Tuesday morning a doubling of tariffs on Canadian aluminum and steel to 50% in retaliation against Ontario’s energy duties. The 50% tariffs were to become effective Wednesday, he said. After the close, the Trump administration said the double tariff is off the table in light of Ford’s retreat.
Trump’s retaliation, though, was the latest in a series of escalating trade moves, including tariffs on Mexico and China, that have stoked fears of a U.S. economic recession and whipsawed markets. Economists fear a trade war will also reignite inflation that’s already struggled to drop to the Federal Reserve’s 2% goal trump threat.
Trump threat
Stocks went into a tailspin on Monday after trump threat declined in an interview on Sunday to rule out a recession this year. Instead, he emphasized “a period of transition” that’s happening.
The tech-heavy Nasdaq had sunk deeper into correction territory, which is defined as at least 10% below a record high, before rebounding after the tariff war appeared to be averted. The broad S&P 500 bounced off its correction line.
The S&P 500 index ended down 0.76%, or 42.49 points, to 5,572.07; the blue-chip Dow shed 1.14%, or 478.23 points, to 41,433.48; and the tech-heavy Nasdaq slipped 0.18%, or 32.23 points, to 17,436.10 after posting its worst day since September 2022 on Monday. The benchmark 10-year yield rose to 4.284%.