US commerce chief says Trump to meet Canada and Mexico in the middle on tariffs

Canadian Prime Minister Justin Trudeau told Trump his tariffs on imports were a 'very dumb thing to do' and said Ottawa was striking back immediately

US President Donald Trump, accompanied by Commerce Secretary Howard Lutnick takes a question from a reporter in the Roosevelt Room of the White House on March 3, 2025 in Washington, DC. (Photo by Andrew Harnik/Getty Images)

US Commerce Secretary Howard Lutnick said President Trump will reach a middle ground with Canada and Mexico on tariffs and that an announcement to that effect was expected on Wednesday.

Mr Trump's new 25% tariffs on imports from Mexico and Canada took effect on Tuesday, along with a doubling of duties on Chinese goods to 20%. The move has sparked trade wars that could slam economic growth and lift prices for Americans still recovering from years of high inflation.

Canadian Prime Minister Justin Trudeau told Mr Trump on Tuesday that his tariffs on Canadian imports were "a very dumb thing to do" and said Ottawa was striking back immediately at its closest ally.

Speaking on Fox Business on Tuesday, Mr Lutnick said: "Now, both the Mexicans and the Canadians were on the phone with me all day today, trying to show that they'll do better, and the president is listening."

"So I think he's going to work something out with them. It's not going to be a pause... but I think he's going to figure out you do more, and I'll meet you in the middle somewhere, and we're going to probably be announcing that tomorrow," he said.

"So somewhere in the middle will likely be the outcome."

Mr Lutnick also added that the Trump administration is considering granting relief from its 25% tariffs on Canadian and Mexican imports to products that comply with the trade pact he negotiated with the two US neighbours during his first term.

Two sources familiar with discussions between the Trump administration and Canadian and Mexican officials told Reuters that the talks are aimed at exemptions for companies that comply with the 2020 US-Mexico-Canada Agreement's rules of origin, largely - but not exclusively - aimed at automakers.

Details of potential changes to the tariffs that took effect on Tuesday are far from agreed, the sources said. Trump will decide on any final deal, and since taking office, he has chosen to impose tariffs when given the option to back off.

The 25% levies on Mexican and Canadian goods create particular problems for automakers, who face massive cost increases for parts and vehicles produced in Mexico and Canada bound for the US market.

Reuters.