Countdown To Tariffs Running Out
President Donald Trump on Thursday evening seemed to confirm plans to hit Mexico and Canada with 25-percent duties starting Feb. 1.
In conversation with reporters from the Oval Office, Trump said the administration will move forward with the oft-repeated tariff threats he first floated in November. In addition to citing his familiar grievances about mass migration and alleged fentanyl smuggling, Trump pointed to “massive subsidies that we’re giving to Canada and to Mexico in the form of deficits” as a reason for the duties.
“We really have to do that, because we have very big deficits with those countries,” he added. Trump said neither country has been “good to us on trade,” adding that both Mexico and Canada have treated the U.S. “very unfairly.”
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“We will be able to make that up very quickly because we don’t need the products that they have,” he said. The tariffs “may or may not rise with time.”
On Friday, Reuters reported that Trump will now announce tariffs against Canada and Mexico that will begin on March 1, but will include a process for the countries to seek specific exemptions for certain imports, three people familiar with the planning said.
Trump didn’t share details about the scope of the duties or which product categories would be impacted, though he told a reporter that the administration would be “making the determination” about whether to include oil to the list on Thursday evening.
Though Trump seemed decisive in his proclamation from the Resolute Desk, the president’s mercurial decision-making process is well documented, and many across government and the private sector are bracing for an 11th-hour about-face. Still, markets were jolted by the reignited duty threats, with the value of the Mexican peso falling 1.1 percent and the Canadian dollar decreasing 1.2 percent within hours of the briefing.
For its part, Canada maintains that it’s ready to respond if the duties do move forward. Premiers from across the country—both liberal and conservative—have vowed to hit back with retaliatory duties and even cut off access to energy and crude oil products sold into states across the Northern U.S.
Chrystia Freeland, a candidate for Canadian Prime Minister who exited Justin Trudeau’s cabinet just days before he announced his resignation, suggested Monday that Canada should release a $200-billion Canadian dollar “retaliation list” of all the goods that it would tax. The former finance minister said doing so would send a message to the U.S. that the tariffs would harm Americans, too.
“Being smart means retaliating where it hurts,” she said in a statement. “Our counterpunch must be dollar-for-dollar—and it must be precisely and painfully targeted: Florida orange growers, Wisconsin dairy farmers, Michigan dishwasher manufacturers, and much more.”
“Now is the moment when Canada must make clear to Americans the specific costs that will accompany any tariff measures by the Trump administration,” she added.
Meanwhile, Mexican President Claudia Sheinbaum at a Wednesday morning press briefing said, “The truth is we don’t think it’s going to happen,” when asked about the proposed 25-percent duties. “And if it does happen, we also have our plan.”
If the Commander in Chief does hit Mexico and Canada with duties on Saturday, he will have an ally in Commerce Secretary hopeful Howard Lutnick, who voiced his support for Trump’s trade policy framework when he appeared before Congress for his confirmation hearing this week.
Lutnick said he’s partial to “across-the-board” duties on products of all kinds—the opposite of the measured and precise application many industry advocates and Democratic lawmakers have been pushing for.
“My way of thinking, and I discussed this with the president, is country by country, macro,” he explained after being asked by Sen. Amy Klobuchar (D-Minn.) whether he’d take a “targeted” approach to new duties.
Lutnick, the chief executive of Cantor Fitzgerald, one of the world’s biggest financial services firms, said the U.S. is “treated horribly by the global trading environment.” Other countries have higher tariffs than America, he argued, as well as other non-tariff trade barriers and domestic subsidies that handicap U.S. businesses. “We need to be treated with respect, and we can use tariffs to create reciprocity, fairness and respect.”
The Wall Street CEO said he’s loathe to engage in tit-for-tat tariff matches with other countries, naming Mexico as an example. “I think when you pick one product in Mexico, they’ll pick one,” he said, alluding to possible retaliatory duties that he said would hurt American farmers.
While Lutnick said tariffs on China-made goods “should be the highest,” he fingered the governments of countries in Europe, as well as Japan and South Korea, for taking advantage of the U.S. when it comes to trade.
When asked whether new duties on products across the globe would drive up inflation, Lutnick called the suggestion “nonsense,” though he admitted that “a particular product’s price may go up.”
