Less than 24 hours after initiating a fresh round of tariffs, the U.S. government has hinted at the possibility of stepping back from the trade war. Commerce Secretary Howard Lutnick, President Donald Trump’s key advisor on tariffs, engaged in discussions with Canadian officials on Tuesday, signaling an interest in finding a resolution.
Talks Underway for a Potential Off-Ramp
Lutnick reached out to multiple levels of Canadian government, including Ontario Premier Doug Ford and Finance Minister Dominic LeBlanc. However, the tone of these conversations varied. A senior Ontario government source described the Ford-Lutnick call as “tough,” while federal Canadian officials downplayed the likelihood of an immediate deal.
Despite mixed reactions from Canadian counterparts, Lutnick appeared optimistic in an interview with Fox Business Network, hinting that President Trump might be open to a compromise with Canada and Mexico. “I think he’s gonna work something out with them,” Lutnick stated, adding that an announcement could be expected as soon as Wednesday.
Tariffs and Trade Agreement Intertwined
While Lutnick remained vague on specifics, he emphasized that there would be no immediate pause in tariffs. Instead, he repeatedly mentioned the possibility of a middle-ground resolution. When pressed for details, he redirected the conversation toward the Canada-U.S.-Mexico Agreement (CUSMA), the continental trade deal that must be reviewed by 2025.
Lutnick indicated that countries adhering to CUSMA regulations might receive tariff exemptions. He also referenced long-standing U.S. grievances with Canada, including restrictions on dairy trade and the Trudeau administration’s proposed digital services tax. Additionally, he raised concerns about Canada’s Goods and Services Tax (GST), implying that it could become a contentious issue in upcoming negotiations.
A senior Ontario official confirmed that CUSMA was discussed during the call, stating, “Lutnick was vague but seemed to be pointing to USMCA [the U.S. name for CUSMA] as an off-ramp. No specific commitments or next steps [were made].”
Political and Economic Repercussions in the U.S.
As Canada prepares to implement retaliatory counter-tariffs, American markets are already feeling the strain of escalating trade tensions. The trade war is quickly becoming a political challenge for President Trump, especially as he faces criticism from both parties.
On the day Trump planned to deliver a speech to Congress, American media was flooded with concerns over the economic impact of the tariffs. Democrats, who have struggled to find a unified message since the last election, have seized this issue, framing it as a wealth transfer that benefits billionaires at the expense of ordinary Americans.
Senator Elissa Slotkin of Michigan, a state heavily dependent on cross-border trade, was chosen to deliver the Democratic response to Trump’s speech. Senate Minority Leader Chuck Schumer echoed concerns, arguing that these tariffs will primarily hurt consumers and households. “It makes no sense to start a trade war with America’s closest trade partners,” Schumer stated. “The casualty of that trade war will be consumers and American households.”
Legal and Congressional Challenges to Tariffs
Trump imposed the tariffs under the International Emergency Economic Powers Act of 1977, citing fentanyl-related deaths as justification. However, this rationale has been met with skepticism. Legal experts representing multinational corporations are preparing to challenge the move in court, arguing that fentanyl was a false pretext.
Trump’s own officials have previously praised Canada and Mexico for their efforts to curb fentanyl trafficking. Lawyers are expected to highlight these contradictions as they challenge the legality of the tariffs.
Meanwhile, Democrats have drafted a motion aimed at forcing a congressional vote to override the tariffs on Canada and Mexico. Though considered a long shot, it reflects growing bipartisan concern over the economic fallout of the trade war.
Republican Hopes for a Strategic Move
Some Republicans remain hopeful that Trump has a well-calculated plan rather than an open-ended trade conflict. Senate Majority Leader John Thune told CNN, “I think the president is looking at this as a means to an end. I don’t think it’s the end itself. I certainly hope it isn’t.”
While uncertainty looms, Lutnick’s comments suggest that negotiations could yield a compromise soon. If an agreement is reached by Wednesday, the focus could shift from immediate tariff disputes to broader trade issues, including Trump’s lingering threats of additional tariffs and the impending CUSMA review.
For more updates on this developing story, visit Coleman News.
