Trump Signals Possible Tariff Relief for Canada Amid Trade War Escalation
A senior U.S. official hinted on Tuesday that President Donald Trump might ease tariffs on Canada and Mexico this week while maintaining a tough stance on China. This came just hours after Canadian Prime Minister Justin Trudeau condemned Washington’s trade policies.
Howard Lutnick told Fox Business that Trump was likely to reach a compromise with Canada and Mexico, suggesting an announcement could come as early as Wednesday.
“Somewhere in the middle will likely be the outcome—the president moving with the Canadians and Mexicans, but not all the way,” Lutnick stated.
Earlier, Trudeau accused Trump of deliberately destabilizing Canada’s economy to facilitate a potential U.S. annexation, while also criticizing the White House for targeting allies while being lenient toward Russia.
Tariff Battle Intensifies
Trump initially announced 25% tariffs on Canadian and Mexican imports in February, citing failures to curb illegal immigration and drug trafficking. The decision was briefly paused but reinstated on Tuesday due to what Trump called “insufficient progress.”
Canada swiftly responded with retaliatory tariffs, prompting Trump to mock Trudeau’s leadership and threaten further escalation.
Markets React to Rising Trade Tensions
The trade conflict rattled global markets, with Wall Street experiencing its second consecutive day of declines. The tariffs impact a broad range of Canadian and Mexican imports, including essential commodities like avocados and construction lumber.
Provinces across Canada launched economic countermeasures, including bans on U.S. alcohol products as part of a unified effort against Trump’s tariffs.
Meanwhile, Trump intensified trade disputes with China by raising tariffs from 10% to 20%. In response, Beijing condemned the move, filed a WTO complaint, and imposed 10-15% tariffs on U.S. agricultural products, including soybeans and chicken. China also suspended U.S. lumber imports.
Economic Concerns Over Inflation
Experts warn that the tariffs could drive up consumer prices, worsening inflation concerns—a key issue in Trump’s re-election campaign.
With Mexico supplying 63% of U.S. vegetable imports and nearly half of fruit and nut imports, grocery prices are expected to rise. “If there’s a 25% tariff, those prices will go up,” said Brian Cornell, CEO of Target.
The housing market may also be affected, as Canada and Mexico provide over 70% of key building materials like softwood lumber and gypsum, according to the National Association of Home Builders.
Canada and China Vow to Fight Back
Canada’s 25% tariffs on $30 billion worth of U.S. imports took effect Tuesday, with Trudeau confirming an expansion to cover an additional $125 billion within three weeks if necessary.
“Canadians are reasonable. We are polite,” Trudeau stated. “But we will not back down from a fight.”
China also pledged to resist the U.S. trade war, vowing to retaliate to the “bitter end.” Beijing’s new tariffs on American goods are set to take effect next week, further escalating the economic standoff.
