WASHINGTON (AP) — Commerce Secretary Howard Lutnick said there might be carveouts coming to the 25% tariffs placed on Canada and Mexico by President Donald Trump, a softening of the U.S. Position after Tuesday’s tax hike hurt the stock market, worried consumers and started a trade war.
In a Wednesday interview with Bloomberg Television, Lutnick said that Trump would update his tariff plans with an afternoon announcement, possibly sparing sectors such as autos from the import taxes.
“There are going to be tariffs, let’s be clear,” Lutnick said. “But what he’s thinking about is which sections of the market that can maybe — maybe — he’ll consider giving them relief until we get to, of course, April 2.”
On April 2, Trump plans to announce what he calls “reciprocal” tariffs to match the tariffs, taxes and subsidies provided by other countries. That could dramatically increase the tariff rates charged globally while maintaining the risk of a broader tariff.
Lutnick said he would talk on Wednesday morning with Trump about the possible options regarding Canada and Mexico, saying that both countries are working to address the U.S. President’s concerns about drug trafficking. Lutnick said to expect Trump to announce his decision Wednesday afternoon.
The Canadian government indicated that nothing less than the removal of the tariffs was acceptable.
“We’re not interested in meeting in the middle and having some reduced tariff. Canada wants the tariffs removed,” Canadian Finance Minister Dominic LeBlanc told the Canadian Broadcasting Corporation.
On Tuesday, Trump put 25% taxes on imports from Mexico and Canada, taxing Canadian energy products such as oil and electricity at a lower 10% rate. The president also doubled the 10% tariff he placed on China to 20%. The administration has said the tariffs are about stopping the smuggling of drugs such as fentanyl, but Trump also suggested that the tariffs are about getting rid of persistent U.S. Trade deficits.
The taxes almost immediately triggered retaliatory measures by Canada and China, with Mexico planning to announce its response on Sunday. The U.S. Stock market has given up all of the gains since Trump’s victory in last year’s presidential election and consumers are already exhausted by inflation and worried the costs of the tax hike would lead to higher prices. Those concerns may have prompted Lutnick to signal a possible retreat in a Tuesday afternoon interview with the Fox Business Network.
“I think he’s going to figure out, you do more, and I’ll meet you in the middle in some way,” Lutnick told Fox Business Network, remarks that caused the stock market to pare its losses on the day.
But in his joint address to Congress on Tuesday night, Trump seemed intent on pushing forward with tariffs.
The U.S. President tried to play down the possible economic harm as “a little disturbance,” as the administration has suggested that the estimates of higher inflation and slower growth in most outside economic forecasts are overblown.
“It may be a little bit of an adjustment period,” he said after claiming that farmers would benefit from reciprocal tariffs on countries that have tariffs on U.S. Exports. “You have to bear with me again and this will be even better.”
Trump also said in his speech that he spoke on Tuesday with “all three, the top people” at the major U.S. Automakers and “they’re so excited.” The big three automakers are General Motors, Ford and Stellantis, the parent company of Chrysler and Jeep. The domestic auto sector would be especially vulnerable to tariffs as it depends on Mexico and Canada as part of its supply chain.
Canadian Prime Minister Justin Trudeau interpreted Trump’s tariffs as a betrayal of the friendship between the two nations.
Trudeau said on Tuesday that his country would plaster tariffs on over $100 billion (U.S. Dollars) of American goods over the course of 21 days.
“Today, the United States launched a trade war against Canada, their closest partner and ally, their closest friend. At the same time, they are talking about working positively with Russia, appeasing Vladimir Putin, a lying, murderous dictator. Make that make sense,” Trudeau said on Tuesday.
Mexico indicated it would announce its own countermeasures on Sunday.
Beijing responded with tariffs of up to 15% on a wide array of U.S. Farm exports. It also expanded the number of U.S. Companies subject to export controls and other restrictions by about two dozen.
