TMTPOST -- U.S. Commerce Secretary Howard Lutnick suggested on Tuesday President Donald Trump may lower tariffs on Canada and Mexcico after the first round of tariffs immediately draw U.S. major trading partners’ retaliation. 

Credit：Xinhua News Agency

Trump may roll back the 25% tariffs on Canada and Mexico as soon as Wednesday, Lutnick told Larry Kudlow, the host of Fox Business News’ “Kudlow”. “Both the Canadians and Mexicans were on the phone with me all day today trying to show that they’ll do better” on reducing fentanyl flows into the U.S., Lutnick said. “So I think [Trump] is ging t work something out with them. ”

Lutnick said the Trump administration would not pause implementation of extra tariffs anymore, but the United States probably reaches compromise with Canada and Mexico as Trump is going to “figure out, ‘you do more, and I’ll meet you in the middle some way.’”  “So somewhere in the middle will likely be the outcome. The president moving with the Canadians and the Mexicans,” Lutnick said.  

Lutnick said he didn’t expect China would be given tariff relief since it continues to subsidize fentanyl. The commerce chief stressed the latest U.S. additional tariffs are all about fentanyl, rather than trade.

Lutnick implied Trump could reduce tariffs if the U.S.-Mexico-Canada Agreement (USMCA) is implemented. “The president is considering giving you relief if you live under those rules,” Lutnick said. “If you haven’t lived under those rules, well, then you have to pay the tariff.”

The tariff reduction under the USMCA means levies could be eliminated or reduced for some sectors, such as autos, if Canada and Mexico are abiding by the USMCA’s tough “rules-of-origin” that govern how much of a car’s parts need to come from within the region.

Lutnick made remarks less than a day after The Trump administration’s 25% tariffs on products imported from Canada and Mexico took effect on Tuesday.  It also doubled extra tariffs on China to 20%. China and Canada soon fought back against the new tariffs.

China unveiled on Tuesday additional tariffs on some U.S. goods effective from March 10. An additional 15% tariff will be imposed on imported chicken, wheat, corn and cotton originating from the United States, and sorghum, soybeans, pork, beef, aquatic products, fruits, vegetables and dairy products will be subject to an additional 10% tariff, according to a statement of the Customs Tariff Commission of the State Council.

The Canadian government said on Tuesday it moved forward 25% retaliatory tariffs on imported goods, beginning immediately with a list of goods worth 30 billion Canadian dollars the same day. The scope of the Canadian counter tariffs will be increased to $155 billion Canadian dollars if the current U.S. tariffs are maintained, and the scope could also be increased if new tariffs are imposed.

Calling the tariffs “no justification”, Canadian Prime Minister Justin Trudeau said the country also planned to challenges the “illegal actions”at the World Trade Organization (WTO) and through the USMCA. In the meantime, the tariffs imposed by Canada will remain in place until he U.S. tarfifs are withdrawn and not a moment sooner, said Trudeau.

Canada's Ontario Premier Doug Ford said his province would levy a 25% surchage on energy exports to three U.S. states--New York, Michigan and Minnesota, and would consider restricting the electricity exports down the line if the tariffs persist.

Mexico planned to slap tariffs on U.S. exports. Mexican President Claudia Sheinbaum on Tuesday vowed to issue her own "tariff and non-tariff measures" - but said further details would be given on Sunday.

In response to Canada’s retaliatory tariffs, Trump warned he will impose more reciprocal tariffsa. “Please explain to Governor Trudeau, of Canada, that when he puts on a Retaliatory Tariff on the U.S., our Reciprocal Tariff will immediately increase by a like amount!” Trump said Tuesday in a post on his social media Truth Social.

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