U.S.-Canada trade, Lutnick and Trump
Commerce Secretary Lutnick states Trump is likely to defer tariffs on all USMCA goods which he believes is more than half of the total with Canada and Mexico. Canada however says retaliation will stay until all US tariffs are removed. We are looking at reducing rather than removing the damage.
It is difficult to know whether to believe Lutnick, which correctly predicted the postponement of auto tariffs yesterday but shortly before Trump went for the full 25% suggested 10% could be seen (though the average rate could end up being near 10% if Lutnick’s comments today prove accurate).
It is unclear exactly what is going on in Trump’s head and whether he is having some heated arguments with Lutnick and potentially others, but it does appear that Trump is sensitive to the stock market which will compete with his personal conviction on the benefits of tariffs. Whatever decision is made near-term, Trump cannot announce tariffs on Canada and Mexico every month, then back down shortly after and maintain credibility indefinitely. The US will also have to live with the fact that Canadian consumers are likely to continue boycotting US goods and the USA as a vacation location.
