Bloomberg
President Donald Trump is likely to defer his 25% tariffs on Canada and Mexico for all goods and services covered by the North American trade agreement known as USMCA, Commerce Secretary Howard Lutnick said, a potentially major reprieve for the America’s two largest trading partners.
Trump will decide Thursday on the scope of a one-month exemption on 25% tariffs imposed this month, Lutnick said in an interview with CNBC. “I think it’s likely it will cover all USMCA-compliant goods and services,” he said.
“If you lived under Donald Trump’s U.S., Mexico and Canada agreement, you will get a reprieve from the tariffs now. And if you do choose to go outside of that, you did so at your own risk, and today is when that reckoning comes,” Lutnick said.
That exemption would last until April 2, when Trump expects to enact a fresh round of tariffs, including “reciprocal” duties on countries around the world and sector-specific ones, like on auto, pharmaceutical and semiconductor imports.
U.S. equities fell as markets opened Thursday in New York, as Trump’s tariff plans continue to spook investors. Stocks trimmed some losses after Lutnick spoke, while WTI futures fell to session lows and the Mexican peso and Canadian dollar rallied.
At the same time, Trump in a social media post vowed to “change” the America’s “massive trade deficit with the world,” suggesting he’s still pushing to move forward with his tariff plans.
Lutnick said he and Trump would speak with their Mexican counterparts later Thursday and that both Mexico and Canada “offered us an enormous amount of work on fentanyl.” The president has tied the tariffs, as well as a 20% duty on China, to the flow of illicit fentanyl and migration into the U.S.
Trump earlier spoke with Canadian Prime Minister Justin Trudeau. The president previously offered a one-month exemption to automobiles covered by USMCA, and administration officials were considering exempting certain agricultural imports.
The development is the latest in a frenzied week that saw Trump apply across-the-board 25% tariffs on Canada and Mexico, with the exception of Canadian energy, which faced a 10% rate. He also doubled his recent tariff on China to 20% from 10%.
That sparked a furious pushback, including a round of retaliatory tariffs from Canada on U.S. goods. The White House said Wednesday that it would give the automakers a one-month deferral on tariffs for USMCA-compliant cars and auto parts. Lutnick’s comments extend that to other sectors.
