U.S. President Donald Trump’s new 25% tariffs on imports from Mexico and Canada took effect on Tuesday, along with a doubling of duties on Chinese goods to 20%, sparking trade wars that could slam economic growth and lift prices for Americans still smarting from years of high inflation.
The tariff actions, which look set to upend nearly $2.2 trillion in annual trade, went live after Trump declared that the top three U.S. trading partners had failed to do enough to stem the flow of fentanyl and its precursor chemicals into the U.S.
Later on Tuesday, however, Commerce Secretary Howard Lutnick told Fox Business Network that Trump may work out a partial resolution with Canada and Mexico that could be announced on Wednesday.
“So I think he’s going to work something out with them,” Lutnick said of Trump. “It’s not going to be a pause – none of that pause stuff – but I think he’s going to figure out, ‘you do more, and I’ll meet you in the middle some way,’ and we’re going to probably be announcing that tomorrow.”
Lutnick said he had spoken to Mexican and Canadian officials on Tuesday. One source told Reuters he spoke with Canadian Finance Minister Dominic LeBlanc.
Lutnick said Trump was considering providing some relief to companies that comply with rules under the U.S.-Mexico-Canada Agreement on trade that is due for renegotiation in 2026.
Trump is expected to tout his tariff agenda, his efforts to curb the fentanyl overdose crisis and a Ukraine minerals deal during a nationally televised address to a joint session of Congress on Tuesday night.
Canadian Prime Minister Justin Trudeau described the tariffs as “a very dumb thing to do” and hit back with 25% tariffs on C$30 billion ($20.7 billion) worth of U.S. imports, including orange juice, peanut butter, wine, spirits, beer, coffee, appliances and motorcycles.
Mexican President Claudia Sheinbaum took a softer approach, vowing retaliation but without details, saying she would announce Mexico’s response on Sunday.
Lutnick’s comments lifted the Canadian dollar and the Mexican peso off of deep losses earlier on Tuesday, but Trump’s tariffs prompted a global stock sell-off. Major U.S. indexes ended lower, with the tech-heavy Nasdaq (.IXIC), opens new tab
veering into correction territory, while shares of automakers, homebuilders, retailers and other tariff-sensitive firms all took hits.
China responded immediately, announcing additional tariffs of 10%-15% on certain U.S. imports from March 10 and a series of new export restrictions for designated U.S. entities. Later it raised complaints about the U.S. tariffs with the World Trade Organization.
