Just hours after first threatening to double the tariffs, Donald Trump halted a move to raise the retaliatory tariffs on Canadian steel and metal imports to 50%.
Trump's move comes after the Canadian province of Ontario suspended new 25% charges on electricity sent to US states after Trump threatened to sharply increase his tariffs on the country.
It marked the latest skirmish in a trade war that risks economic damage to the two North American neighbours.
Ontario Premier Ford had announced he would tax electricity exports to the US in an effort to get those tariffs removed. He had also previously said he would "not hesitate to shut off electricity completely" if the US "escalates".
Announcing the decision to suspend the electricity duties, Ford said he thought it was the "right decision" to try to start focus the discussions on the wider North American free trade deal.
"With any negotiation that we have, there's a point that both parties are heated and the temperature needs to come down," he said. "They understand how serious we are," he added. "We have both agreed, let cooler heads prevail. We need to sit down and move this forward."
In his social media post early on Tuesday, which threatened to double levies on Canadian steel and aluminium, Trump said he was responding to Ford's moves.
He also criticised Canada for relying on the US for "military protection", and reiterated that he wanted the country to become the 51st US state.
He add that it "would make all tariffs, and everything else, totally disappear" if Canada were to join the US as a state.
The White House declared the episode a win, saying in a statement that Trump had "once again used the leverage of the American economy, which is the best and biggest in the world, to deliver a win for the American people.
The White House declared the episode a win, saying in a statement that Trump had "once again used the leverage of the American economy, which is the best and biggest in the world, to deliver a win for the American people".
The back-and-forth came during a turbulent time for markets. The S&P 500 index of the largest firms listed in the US fell a further 0.7% on Tuesday after dropping 2.7% on Monday, which was its biggest one-day drop since December.
Monday's stock market sell-off had begun after Trump said the economy was in a "transition" when asked about whether the US was heading for a recession.
Investors have been concerned about the economic effects of Trump's trade policies, which it is feared could push up inflation in the US and beyond, while uncertainty leads to economic paralyisis.
Canada, one of America's closest trade partners, has borne the brunt of Trump's ire as he has launched trade battles in his first months in office.
Trump has hit goods from the country, along with Mexico, with a blanket 25% tariff, though he signed orders temporarily exempting a significant number of items from the new duties, which he said were a response to drug and migrants crossing into the US.
Canada is also facing 25% tariffs on its steel and aluminium, which are set to go into effect on Wednesday, after Trump said he was ending exemptions to the duties previously granted to some countries.
Canada has called Trump's attacks unjustified and announced retaliation, including new tariffs on C$30bn ($22bn; £16bn) US products.
