Whatever economic history textbooks look like in 100 years — floating solar-powered screens, digital files that can be downloaded onto your brain’s hard drive, or maybe just books — they could end up referring to Tuesday as a major escalation, or a major de-escalation, in the Great North American Trade War of 2025.

After tit-for-tat threats triggered an S&P 500 selloff that dragged the blue chip index down into correction territory during trading hours, cooler heads prevailed in the afternoon, when the US and Canada agreed to sit down and take a look at their shared free trade agreement.

Unnerves of Steel

Traders got their morning jolt at the office Tuesday not from the usual Cup of Joe, but from a Post of Donald.

President Trump took to his Truth Social platform and threatened to double tariffs on Canadian aluminum and steel imports to a staggering 50%. It came in response to Ontario Premier Doug Ford, the leader of Canada’s largest province, who retaliated against Trump’s blanket 25% tariffs on his country a day earlier by slapping a 25% surcharge on electricity exports to the US.

But then the politicians stood down, the market regained some of its losses, and the US likely avoided a heavy metal pain:

• The White House said it won’t double the tariffs on aluminum and steel, leaving them at 25%, and Ford said he would pause the electricity surcharge. US Commerce Secretary Howard Lutnick, Canadian Finance Minister Dominic LeBlanc and Ford announced they will meet tomorrow to renegotiate their portion of the United States-Mexico-Canada free trade agreement known as USMCA, which applies to the two nations’ $762 billion annual exchange of goods and services.
• The S&P 500 closed the day down 0.76%, out of the psychologically perilous correction territory. Had Trump gone through with doubling the tariffs, things could have been much worse: America’s northern neighbor supplied more than half, or 2.7 million metric tons, of its aluminum last year. The CEO of US aluminum manufacturing giant Alcoa warned last month that even the 25% tariff on the metal that Trump still plans to impose could cost America 10,000 jobs.

According to Commerce Department data, the US imported $11.4 billion of aluminum and $7.6 billion worth of iron and steel from Canada last year (the latter two are counted together).

Who’s Next? The automobile industry. Trump said, in his furious morning post, that he will “substantially increase” tariffs on cars imported from north of the border on April 2, and “permanently shut down the automobile manufacturing business in Canada.” Thursday’s summit between Lutnick, Leblanc and Ford became just the starting piston in a metaphorical race to renegotiate USMCA by an April Fool’s Day finish line.

Pack light or pay up: Southwest will no longer let customers fly with two free checked bags, a unique policy that set it apart from its peers.

Starting in late May, Southwest said it’ll only grant two free checked bags to business-class flyers and anyone who has reached the upper tiers of its loyalty program. Southwest credit card holders and some lower-level loyalty club members will get one free checked bag.

Everyone else will have to pay a fee to stow their five extra pairs of shoes in the cargo hold.

Critics say the switcheroo could make Southwest lose its zest, or what sets it apart from other airlines. As recently as September, Southwest execs said the two-bag policy was so popular that, if the airline were to ditch it, it would lose more money from customers fleeing to rivals than it could recoup with bag fees.

Last year, the airline announced plans to do away with another uniquely Southwest policy: its open, no-assigned-seats boarding policy.

Buckle Up, Turbulence Ahead

Southwest has been under pressure from activist investors to squeeze out more revenue per seat. And its first-ever large-scale layoffs last year weren’t enough to get it to cruising altitude. Southwest trimmed its quarterly guidance yesterday.

It’s not alone: Delta, American, and United all cut their forecasts this week alongside Southwest. Cabin pressure is rising for the wider industry as airline execs grow concerned that consumers are skipping vacations (especially stateside ones) and companies are telling employees to phone in business trips:

• Delta cited economic uncertainty as a top reason travel demand is cooling, as well as fears following a string of airplane safety incidents — like Delta’s recent nonfatal flipped-plane landing.
• United also noted it expects its government travel to fall by 50% after spending crackdowns and layoffs in the sector.

At the same time, airlines expect revenue to remain strong from travelers opting for premium perks and heading to far-flung international destinations.

Booking “Basic Economy Plus Extra”: In response to shifting spend, airlines are adjusting their routes and creating new ways for flyers to splurge — like how Southwest plans to charge for extra legroom when it rolls out assigned seating. The risk: fee-fatigued customers book with cheaper rivals, or skip their next trip altogether.

The so-called Magnificent Seven has given way to a new Resilient One: Meta.

Unlike the other six companies in its mega-cap cohort, Meta’s share price is actually up so far in 2025. And on Tuesday, founder and CEO Mark Zuckerberg’s empire gave investors another reason for optimism. According to a Reuters report, the social media giant has begun testing its made-in-house AI training chip. The milestone could spell more trouble for the suddenly beleaguered Nvidia.

Made in Meta-Land

For roughly the past two years, Meta has been hyper-focused on building and implementing AI models to supercharge its user engagement-targeted advertising machine. And it has worked: In 2024, Meta saw its net income jump an astounding 59%, to $62 billion.

Still, the AI makeover has been costly. Capital expenditures jumped from around $28 billion in 2023 to $38 billion in 2024 and the company expects another major jump to around $65 billion this year, much of which will be spent on further investing in AI.

Its next mission is to reduce its reliance on key suppliers like Nvidia in hopes of bringing down long-term costs. Tuesday’s development marks a major first step:

• According to sources who spoke with Reuters, Meta is testing a so-called dedicated accelerator training chip, which is used for the compute-intensive practice of dumping gobloads of data into AI systems to teach them how to perform. The company aims to use its own chips for training by 2026.
• Meta hopes to improve its recommendations systems with the new chip, sources told Reuters, as well as implement it into its suite of generative AI tools and chatbots. Meta is working with TSMC on production.

Take Two: That’s all potentially bad news for Nvidia. Last year, the company said around 50% of its revenue comes from four unnamed customers — one of which is very likely Meta, which has placed billions of dollars of orders to amass a stockpile of Nvidia’s GPUs. This year, the company has been dinged by both the DeepSeek moment, which suggested that AI systems could be far more compute-efficient than expected, and a broader market rout amid economic uncertainty; its stock is down around 20% year-to-date, compared with Meta’s nearly 1% gain year-to-date. The potentially good news for Nvidia? Meta’s tested proprietary chips before — only to fail key assessments and scrap development on some chips altogether. Let’s see how the next round goes.