As the trade war between Canada and the U.S. reaches its second day, officials in U.S. President Donald Trump’s administration are discussing exemptions for some sectors ahead of further announcements from the president.
U.S. Secretary of Commerce Howard Lutnick says Trump is expected to share more updates on his volley of tariffs later today, hinting that meeting “somewhere in the middle” is a likely outcome for import levies on Canada and Mexico.
“There are going to be tariffs, let’s be clear,” Lutnick told Bloomberg Wednesday morning in a live interview.
“It will be 25 per cent but ... there will be some categories left out; it could well be autos, could be others as well,” he said, describing his team’s expectations.
Later in the day, White House Press Secretary Karoline Leavitt confirmed reports that the administration would be delaying tariffs specific to automotive manufacturing, citing the Canada-U.S.-Mexico trade agreement (USMCA).
“We are going to give a one-month exemption on any autos coming through USMCA,” Leavitt said, adding that reciprocal tariffs are still in place for April 2.
“But at the request of the companies associated with USMCA, the president is giving them an exemption for one month so they are not at an economic disadvantage.”
The car dealers involved include Stellantis, Ford and General Motors.
Both administration officials linked potential tariff exemptions with the trade agreement, with Lutnick suggesting that compliance with the deal’s rules on a sector-by-sector basis may lead to carve-outs.
“USMCA, go look at that, that was the agreement we made,” he said.
“Everyone who didn’t live under those terms, did so at their own risk.”
Lutnick also reiterated the administration’s link between tariffs and flows of fentanyl across U.S. borders.
“This not a trade war; this is a drug war,” he said. “We’re trying to send a message that fentanyl has got to end, coming in from Mexico and Canada.”
Secretary’s comments echo disputed Trump claims
Trump’s sweeping tariffs of 25 per cent on Canadian and Mexican goods and 10 per cent on Canadian energy took effect Tuesday morning, plunging the continent into a bitter trade war.
In response to the American volley of import taxes, Prime Minister Justin Trudeau announced immediate, reciprocal tariffs of 25 per cent on $30 billion in U.S. goods, expected to rise to $155 billion by late March, should the U.S. tariffs remain in effect.
“Canada will not let this unjustified decision go unanswered,” reads a Monday statement from the Prime Minister’s Office. “While we urge the U.S. administration to reconsider their tariffs, Canada remains firm in standing up for our economy, our jobs, our workers, and for a fair deal.”
Trudeau has also taken aim against the president’s stated motivations for the tariffs, noting that “less than one per cent” of intercepted fentanyl inflows to the U.S. come from Canada, and most recently accusing Trump of seeking not to fight the war on drugs, but to stage a power grab against Canada.
“The excuse that he’s giving for these tariffs today, of fentanyl, is completely bogus, completely unjustified, completely false,” Trudeau said in a press conference Tuesday. “So, we actually have to fold back on the one thing he has said repeatedly, that what he wants is to see a total collapse of the Canadian economy, because that’ll make it easier to annex us.”
With files from CTV News' Lynn Chaya and Spencer Van Dyk
