Less than 36 hours after imposing sweeping tariffs against America’s largest trading partners, the Trump administration is already signaling it is ready to compromise on lifting them — at least partially.
In an appearance on Bloomberg TV Wednesday morning, Commerce Secretary Howard Lutnick said the president would consider giving “some relief” if Canada and Mexico are seen as addressing fentanyl flows into the U.S.
“The president is listening to the offers from Mexico and Canada. He’s thinking about trying to do something in the middle,” Lutnick said. “He’s thinking about it. We’re talking about it. When I leave here I’m going to go talk about it with him. And I think early this afternoon or this afternoon we expect to make an announcement.
“And my thinking is it’s going to be somewhere in the middle. So not 100% of all products, and not none; somewhere in the middle, because I think Mexico and Canada are trying their best.”
Lutnick mentioned trying to get the two countries to achieve greater compliance with American-made provisions of the United States-Mexico-Canada Agreement (USMCA), the successor trade agreement to NAFTA that Trump established in 2018.
At the same time, Lutnick said “some categories” could also end up being exempted by the 25% tariffs, including autos, which are subject to some of the strictest American-made rules of the USMCA.
Lutnick’s suggestion that there’s room for daylight in talks with Canada and Mexico echoed remarks he gave Tuesday afternoon that briefly sent stocks higher in after-hours trading.
Yet market reaction to his latest comments was tempered by more signs of a slowdown in the U.S. economy. Early Wednesday, ADP reported that private sector job creation slowed in February with companies adding just 77,000 workers, far below the 186,000 jobs added in January and below the 148,000 Dow Jones consensus estimate.
Education and health services had some of the weakest job growth last month while manufacturing, construction and leisure and hospitality showed strength, the data showed.
And Lutnick’s statements were hardly reflected in Trump’s address to Congress Tuesday night.
“We will take in trillions and trillions of dollars and create jobs like we have never seen before,” Trump told Congress.
Trump acknowledged there could be difficulties along the way, particularly for the agriculture industry, which has already faced retaliatory tariffs from China and Canada in response to tariffs Trump has put on those countries. He told farmers that there “may be a little bit of an adjustment period,” that they “will probably have to bear with me again.”
“Tariffs are about making America rich again and making America great again. And it’s happening, and it will happen rather quickly,” he said. “There’ll be a little disturbance, but we’re OK with that. It won’t be much.”
According to media reports, the president was scheduled to speak with Canadian Prime Minister Justin Trudeau on Wednesday, while Mexican President Claudia Sheinbaum said she planned to speak with the president on Thursday.
Businesses including automakers, alcohol producers and major retailers, like Target, have warned that the added costs for companies to import goods from Canada and Mexico will have wide-ranging implications across the American economy and lead to higher prices for consumers.
Tariffs are paid by the U.S.-based company importing the goods into the country. Those companies can either pass the added costs on to their customers in the form of higher prices, absorb the tariffs by cutting costs elsewhere or take a hit on profits.
Uncertainty around tariffs on Mexico and Canada has been looming for months after Trump first raised the threat shortly after his election. Last month, Trump said he would be enacting tariffs on the two countries on Feb. 4 only to announce he was delaying the move by a month the day before the tariffs were set to be collected. This week, Trump said the countries hadn’t done enough over the past month to stop the flow of fentanyl and began collecting the tariffs at midnight on Tuesday.
