Trump grants 1 month exemption for US automakers from new tariffs on imports from Mexico, Canada #CanadaFinance

Trump and Trudeau spoke by phone on Wednesday about the tariffs, said the source as well as, separately, a White House official.

Lutnick said he would talk on Wednesday morning with Trump about the possible options regarding Canada and Mexico, saying that both countries are working to address the U.S. president’s concerns about drug trafficking. Lutnick said to expect Trump to announce his decision Wednesday afternoon.

On Tuesday, Trump put 25% taxes on imports from Mexico and Canada, taxing Canadian energy products such as oil and electricity at a lower 10% rate. The president also doubled the 10% tariff he placed on China to 20%. The administration has said the tariffs are about stopping the smuggling of drugs such as fentanyl, but Trump also suggested that the tariffs are about getting rid of persistent U.S. trade deficits.

The taxes almost immediately triggered retaliatory measures by Canada and China, with Mexico planning to announce its response on Sunday. The U.S. stock market has given up all of the gains since Trump’s victory in last year’s presidential election and consumers are already exhausted by inflation and worried the costs of the tax hike would lead to higher prices. Those concerns may have prompted Lutnick to signal a possible retreat in a Tuesday afternoon interview with the Fox Business Network.

“I think he’s going to figure out, you do more, and I’ll meet you in the middle in some way,” Lutnick told Fox Business Network, remarks that caused the stock market to pare its losses on the day.

But in his joint address to Congress on Tuesday night, Trump seemed intent on pushing forward with tariffs.

The U.S. president tried to play down the possible economic harm as “a little disturbance,” as the administration has suggested that the estimates of higher inflation and slower growth in most outside economic forecasts are overblown.

“It may be a little bit of an adjustment period,” he said after claiming that farmers would benefit from reciprocal tariffs on countries that have tariffs on U.S. exports. “You have to bear with me again and this will be even better.”

Trump also said in his speech that he spoke on Tuesday with “all three, the top people” at the major U.S. automakers and “they’re so excited.” The big three automakers are General Motors, Ford and Stellantis, the parent company of Chrysler and Jeep. The domestic auto sector would be especially vulnerable to tariffs as it depends on Mexico and Canada as part of its supply chain.

Ontario Premier Doug Ford told the AP the auto sector in the U.S. and Canada will last approximately 10 days before they start shutting down the assembly lines in the U.S. and in Ontario.

“People are going to lose their jobs,” he said.

Trudeau said on Tuesday that his country would plaster tariffs on over $100 billion (U.S. dollars) of American goods over the course of 21 days, stressing that the United States had abandoned a long-standing friendship.

“Today, the United States launched a trade war against Canada, their closest partner and ally, their closest friend. At the same time, they are talking about working positively with Russia, appeasing Vladimir Putin, a lying, murderous dictator. Make that make sense,” Trudeau said on Tuesday.

Mexico indicated it would announce its own countermeasures on Sunday.

Beijing responded with tariffs of up to 15% on a wide array of U.S. farm exports. It also expanded the number of U.S. companies subject to export controls and other restrictions by about two dozen.

“If war is what the U.S. wants, be it a tariff war, a trade war or any other type of war, we’re ready to fight till the end,” China’s embassy to the United States posted on X on Tuesday night.

In response to China, U.S. Defense Secretary Pete Hegseth told Fox News Channel’s “Fox & Friends” that the United States is “prepared” for war against the world’s second largest economy.

“Those who long for peace must prepare for war,” Hegseth said Wednesday morning. “If we want to deter war with the Chinese or others, we have to be strong.”

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Gillies reported from Toronto.