U.S. President Donald Trump might unveil a tariff compromise with Canada and Mexico as early as Wednesday, according to Commerce Secretary Howard Lutnick, who spoke amid the fallout of a trade war Trump kicked off on Tuesday.
Lutnick, in a Fox News interview, suggested Trump is open to finding a middle ground after hitting Canadian and Mexican imports with 25 per cent tariffs and Canadian energy with a 10 per cent levy. Canada swiftly retaliated with its own tariffs, and Mexico signaled it would follow suit.
“The Mexicans and Canadians have been calling me all day, pleading their case, and the president’s hearing them out—he’s fair, reasonable,” Lutnick said. “He’s not pausing anything, no stalling. But he’ll likely say, ‘Step up, and I’ll ease off some.’ We could announce that tomorrow. It’ll probably land somewhere in between—not a full rollback, but a shift.”
Prime Minister Justin Trudeau called the U.S. move a “dumb” escalation of tensions across North America, forcing Canada to hit back with immediate 25 per cent tariffs on $30 billion in U.S. goods—set to expand to $125 billion more in 21 days if the standoff holds.
Lutnick took a swipe at Trudeau’s sharp words, pointing out the prime minister’s looming exit as Liberals pick a new leader Sunday. “Maybe they’ll choose someone sharp who’ll sit down with Trump and say, ‘Let’s do fair business and ditch this mess,’” he quipped. “What happened to the USMCA? Simple: Canada’s been gaming it.”
Trump brokered the United States-Mexico-Canada Agreement (USMCA) in his first term, leaning on tariff threats to wring concessions from both neighbors. That pact faces a review next year. Lutnick had hinted Sunday on Fox News that the 25 per cent rate might soften, but Trump stuck to his guns Tuesday.
The administration, including Lutnick, frames the tariffs as a fentanyl crackdown, not just trade muscle. Trump invoked the International Economic Emergency Powers Act, citing a border drug emergency, to justify the move. Yet U.S. and Canadian data show less than one per cent of fentanyl enters via Canada, with seizures at the northern border—down to 14 grams in January—dwindling since last summer’s peak.
Canada’s poured resources into border security since Trump’s initial threats, appointing a “fentanyl czar,” tagging Mexican cartels as terrorists, and launching a joint U.S.-Canada strike force. Cops have trumpeted drug busts to prove it. Still, talks with Trump’s team over the past month didn’t sway him.
Vice-President JD Vance, speaking on Capitol Hill Tuesday, dismissed Canada’s efforts. “They’ve let fentanyl slip through—saying Mexico’s worse doesn’t excuse it,” he said, hinting at future talks.
Lutnick told CNBC the same day that Trump won’t budge until fentanyl deaths plummet. “This isn’t trade—it’s a drug war. They’d better get that,” he said. White House Press Secretary Karoline Leavitt, on Fox News Monday, acknowledged “some cooperation” from both countries but stressed past seizures as proof they must do more.