Donald Trump is weighing plans to water down sweeping US tariffs on goods from Canada and Mexico, according to a senior official, one day after an economic strike on the US’s two biggest trading partners sparked warnings of price increases and disruption.
The US president extended his aggressive trade strategy at midnight on Tuesday by targeting the country’s two closest neighbors with duties of 25%.
US retail giants predicted that prices were “highly likely” to start rising on store shelves almost immediately, raising questions about Trump’s promises to “make America affordable again” after years of heightened inflation.
Howard Lutnick, the US commerce secretary, indicated on Wednesday that the president could rescind some tariffs as part of a deal with Canada and Mexico.
“What he is thinking about is which sections of the market that can maybe – maybe he’ll consider giving them relief,” Lutnick told Bloomberg. While some products would still face a 25% tariff under the deal, “it could well be autos, it could be others as well” that get relief, he suggested.
During Trump’s joint address to Congress on Tuesday evening, he acknowledged that tariffs would cause “a little disturbance, but we’re OK with that”.
He blamed cost of living challenges on his predecessor, Joe Biden, from whom he claimed to have inherited “an economic catastrophe and an inflation nightmare”.
The US economy has, in fact, remained resilient in recent years, and inflation has fallen dramatically from its peak – at the highest level in a generation – three years ago.
“Among my very highest priorities is to rescue our economy and get dramatic and immediate relief to working families,” said Trump. “As president, I am fighting every day to reverse this damage and make America affordable again.”
Trump is expected to speak on Wednesday with Justin Trudeau, the Canadian prime minister. “Even though you’re a very smart guy, this is a very dumb thing to do,” Trudeau told Trump publicly after the US imposed tariffs this week.
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Trump had initially pledged to target Canada and Mexico with tariffs on his first day back in office. Upon his return, however, he said he was considering imposing the tariffs at the start of February. Last month, he offered Canada and Mexico a one-month delay at the 11th hour.
Trump and his allies claim that higher tariffs on US imports from across the world will help “Make America great again”, by enabling it to obtain political and economic concessions from allies and rivals on the global stage.
But businesses, both inside the US and worldwide, have warned of widespread disruption if the Trump administration pushes ahead with this strategy.
Since winning November’s presidential election, the president has focused on China, Canada and Mexico, threatening the three markets with steep duties on their exports unless they reduced the “unacceptable” levels of illegal drugs crossing into the US.
