Can it be last-minute deal on Canada and Mexico?
Trump’s advisors are seeking a last-minute agreement to reduce tariffs imposed on Canada and Mexico. Advisers to President Trump are exploring various alternatives to circumvent the implementation of the universal tariffs on Mexico and Canada that he had promised. This comes despite his reaffirmation on Thursday that the tariffs are imminent. The circumstances remain dynamic, and Trump may yet fulfill his promise to impose a 25% blanket tariff on imports from the nation’s two principal trading partners. The president has repeatedly asserted his intention to accomplish this by Saturday.
Amid the protracted negotiations with Canada and Mexico, the administration seems to be wavering on the decision to impose tariffs on all imports from these nations. Sources indicate that officials are leaning towards implementing more targeted measures instead. Trump is expected to unveil a trade initiative by Saturday, though it is anticipated to target specific sectors, particularly steel and aluminum. Trump might also incorporate significant exemptions, including oil. Tariffs may be implemented through established legal frameworks rather than the more unconventional methods that officials had earlier proposed, according to sources familiar with the discussions, who emphasized that no definitive conclusions have yet been reached.
The administration may unveil new tariffs by Saturday, yet a grace period could precede their implementation, facilitating ongoing negotiations with neighboring countries, according to several sources. Trump indicated that he would make a decision, probably on Thursday evening, regarding the imposition of tariffs on imports of oil from Mexico and Canada. “I will impose a tariff of 25% on Canada, and additionally, a 25% tariff on Mexico, and this action is necessary,” Trump stated, noting that these duties may increase in the future.
In recent weeks, the United States has been embroiled in intense negotiations with Canada and Mexico, alongside lobbying efforts from North American businesses and labor organizations. These stakeholders contend that the proposed blanket tariffs could disrupt continental supply chains, elevate prices, and heighten dependence on trade with adversarial nations like China and Venezuela. Individuals crossed into the United States via an opening in a segment of the border wall between the U.S. and Mexico, located in Sunland Park, New Mexico.
Trump has indicated that the implementation of tariffs will occur should the nations fail to take measures to curb migration and drug trafficking across U.S. borders. The administration has contemplated the application of emergency economic powers, rooted in a law from the 1970s, to implement tariffs. This consideration arose following Trump’s threats last Sunday directed at Colombia concerning a migration dispute, although he subsequently retreated after asserting that his demands had been satisfied.
Historically, the act in question has not seen the implementation of tariffs; however, it is noteworthy that President Richard Nixon did impose emergency tariffs under an earlier legislative framework. Concerns are mounting among officials regarding the application of emergency powers for tariffs, following a federal judge’s recent temporary injunction against a memo from the White House Office of Management and Budget aimed at halting federal grants and loans. The court indicated that the order could potentially contravene federal legislation mandating the president to allocate funds sanctioned by Congress.
The injunction on the OMB action has led certain White House officials to reconsider their strategy regarding the imposition of tariffs under the International Emergency Economic Powers Act, according to sources familiar with the planning process. Policymakers are understandably cautious about the prospect of an IEEPA action being enjoined at this juncture, particularly given the potential need to leverage it against other nations in the future.
The White House has yet to provide a response to inquiries for comment. Howard Lutnick, Trump’s nominee for Commerce Secretary, informed lawmakers on Wednesday that should Canada and Mexico adhere to Trump’s requests to limit migration and drug trafficking, “there will be no tariffs.” He positioned the potential imposition of tariffs as a lever to compel action from those governments. “It is not a tariff in the strictest sense,” Lutnick remarked. “It constitutes a measure of domestic policy.”
Officials from the administration have publicly asserted that Canada and Mexico are advancing in their efforts to fulfill Trump’s requirements, which, it appears, would enable them to evade immediate tariffs. A senior government official noted that Canadian officials found Lutnick’s testimony to be encouraging.
David McGuinty, the Canadian minister overseeing border affairs, announced on Wednesday that the government is engaged in discussions with the United States regarding the establishment of a new “North American fentanyl strike force.” The task force, if finalized, is expected to entail increased investment in both human resources and infrastructure, though further specifics were not disclosed. President Claudia Sheinbaum announced on Monday that Mexico has established a working group with the Trump administration focused on migration issues, which is expected to broaden its scope to encompass additional facets of the U.S.-Mexico relationship. U.S. officials indicated that her government is aligning with Trump’s stipulations regarding the southern border, having consented to accept expelled non-Mexican migrants who are pursuing asylum in the United States, marking a notable concession to the Trump administration.
The ArcelorMittal Dofasco steel facility located in Hamilton, Ontario, Canada. The United Steelworkers union in the U.S. is urging Trump to reconsider his stance on blanket tariffs. The initiatives have unfolded alongside a vigorous lobbying effort from American industries and labor unions dependent on supply chains that traverse U.S. borders, notably within the automotive sector and among steelworkers. This week, the United Steelworkers, a formidable union instrumental in securing Trump’s electoral victories throughout the industrial Midwest, urged the former president to reconsider his stance on blanket tariffs.
In private discussions, the steelworkers union has underscored the significance of Canadian oil to a substantial portion of its membership, highlighting that approximately 30,000 steelworkers are engaged in oil refineries reliant on Canadian crude. This oil could potentially be supplanted by imports from alternative sources, such as Venezuela, should Canadian oil prices escalate beyond a viable threshold. The steel sector, alongside external trade consultants to Trump, has been advocating for the reinstatement of tariffs on steel and aluminum imports from Mexico and Canada, which were removed in 2019 amid the discussions surrounding the U.S.-Mexico-Canada free trade agreement.
The sector has persistently voiced concerns regarding the influx of steel imports from these two nations, which they argue is detrimental to American mills. This week, the Coalition for Prosperous America, a trade group advocating for protectionist measures, presented a set of options to the Trump administration for implementing tariffs under Section 232 of the Trade Expansion Act. This established legal framework is considered to carry less risk compared to the use of IEEPA. Reinstating steel tariffs may mitigate the most severe repercussions of universal tariffs, yet it carries its own set of risks. In 2018, Mexico retaliated against U.S. tariffs on steel and aluminum by imposing its own tariffs on a range of American products, including steel, pork, cheeses, apples, and bourbon, strategically aiming at Republican strongholds.
Mexico’s Economy Minister Marcelo Ebrard announced on Wednesday that Sheinbaum’s cabinet has been deliberating potential retaliatory measures in their weekly meetings over the last eight months. “While I cannot disclose specific plans, rest assured that we have conducted a thorough examination of the matter,” he stated.
