Commerce Secretary Howard Lutnick indicated that President Donald Trump is expected to delay imposing 25% tariffs on Canada and Mexico for all goods and services covered under the USMCA trade agreement, offering a potential reprieve to the U.S.’s largest trading partners.
Lutnick told CNBC that Trump would determine the specifics of a one-month exemption on Thursday, stating, “I think it’s likely it will cover all USMCA-compliant goods and services.”
“If you lived under Donald Trump’s US, Mexico and Canada agreement, you will get a reprieve from the tariffs now. And if you do choose to go outside of that, you did so at your own risk, and today is when that reckoning comes,” Lutnick said.
The exemption is set to last until April 2, after which Trump intends to introduce new tariffs, including “reciprocal” duties on other nations and industry-specific levies on sectors such as automobiles, pharmaceuticals, and semiconductors.
The markets responded negatively as Trump’s tariff strategy continued to create uncertainty.
US stocks fell early Thursday, though losses were pared back following Lutnick’s remarks. Meanwhile, WTI crude futures dropped to session lows, while the Canadian dollar and Mexican peso saw gains.
Trump reinforced his commitment to reshaping US trade policy in a social media post, vowing to “change” the country’s “massive trade deficit with the world,” signaling his determination to move forward with tariffs.
Lutnick also noted that he and Trump planned to speak with Mexican officials later that day, adding that both Mexico and Canada “offered us an enormous amount of work on fentanyl.”
The administration has linked the tariffs, along with a 20% duty on China, to efforts to curb illicit fentanyl trafficking and migration into the US.
Earlier, Trump held discussions with Canadian Prime Minister Justin Trudeau, following a previous offer of a one-month exemption for USMCA-compliant automobiles.
The White House had already announced a temporary deferral for auto tariffs, and Lutnick’s latest remarks suggest that other industries may also receive exemptions.
The move comes amid a volatile week in trade policy, as Trump imposed across-the-board 25% tariffs on Canada and Mexico, with Canadian energy products facing a lower 10% rate.
In response, Canada launched retaliatory tariffs on US goods, intensifying tensions between the two countries.
