- Howard Lutnick says Trump may roll back tariffs on Canada & Mexico
- But the U.S. wouldn’t drop the tariffs entirely and they need to do better
- U.S. previously announced 25%, and an additional 10% on Canadian energy
The month-long pause in implementing trade tariffs on imports from Mexico and Canada is over and it’s time to make a decision – Howard Lutnick said Trump may roll back tariffs 25% as well as an additional 10% on Canadian energy. Many analysts are predicting higher prices for industrial inputs and components, as well as consumer goods.
More About Donald Trump’s Position and Howard Lutnick’s Comments
So, US Secretary of Commerce Howard Lutnick gave some detailed comments on Donald Trump’s decision to impose trade tariffs against Canada and Mexico:
“Both the Mexicans and the Canadians are on the phone with me all day today, trying to show that they’ll do better. Donald Trump might be open to meeting them halfway, but U.S. wouldn’t drop the tariffs entirely. We’re going to probably be announcing that tomorrow.”
These rather strict positions may be blamed by some, but still, Howard Lutnick supports Trump’s position that these trade terms have actually been unfair to the U.S. all these years:
“The President is listening because, you know, he’s very, very fair and very reasonable. Mexico and Canada would need to do more before any relief is granted.”
However, some analysts warn that such measures could have many side effects on various sectors of the U.S. economy, such as industry, energy, and others. For example, Travis Tokar, a professor at Texas Christian University, said:
“A fast-food chicken sandwich might not seem connected to Canadian or Mexican imports, but if the aluminum foil used in its packaging comes from one of those countries, the cost goes up.”
At the same time, we are talking about consumer goods too, for example, a lot of food comes to the U.S. from Mexico, as noted by Target CEO Brian Cornell that prices for strawberries, avocados, and bananas could rise within days, Yale Budget Lab analysis estimated that food prices will climb nearly 2% overall, while fresh produce could spike by almost 3%.
A very important side effect was the already expected retaliatory tariffs from Canada and Mexico. In particular, Canada has imposed a retaliatory 25% tariff, promising to tighten this soon, while Mexico has imposed tariffs that could affect key areas of the US economy such as agriculture.
Markets also reacted immediately, for example, starting Tuesday Dow Jones Industrial Average was down 431 points, losing 1 percent.
S&P 500 index was down 0.9 percent.
Nasdaq composite was down 0.7 percent.
Conclusion
This is all a rather ambiguous situation, with many unexpected consequences.
Could it work well for the U.S. economy in the long run, and make it more independent and sustainable? Maybe.
Could it visibly damage political relations with key partners and immediate neighbors? Maybe as well.
We’ll be watching events and their impact on the U.S., and the whole world, closely. Be aware and stay tuned for updates on the rapidly evolving politics, economic, and crypto landscape.
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