US signals broader tariff reprieve for Canada, Mexico; trade gap grows

The United States hinted on Thursday at an expanded reprieve for Canada and Mexico from President Donald Trump's steep tariffs, with a one-month pause for car imports potentially extended to all goods covered by a North American trade pact.

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Commerce Secretary Howard Lutnick told CNBC: “It's likely that it will cover all USMCA compliant goods and services, so that which is part of President Trump's deal with Canada and Mexico are likely to get an exemption from these tariffs.”

He added that the reprieve would be for one month, a day after the White House gave automakers temporary relief too from the levies that hit everything from lumber to avocado imports.

But after a month, Canadian and Mexican goods could still face reciprocal tariffs, Lutnick told CNBC, with Trump promising an announcement on April 2.

Trump's 25-per cent tariffs on US imports from Canada and Mexico -- with a lower rate for Canadian energy - kicked in Tuesday, sending global markets downward and straining ties between the neighbors.

Ottawa swiftly announced retaliatory levies, while Mexican President Claudia Sheinbaum similarly promised countermeasures.

On Thursday, Canadian Prime Minister Justin Trudeau warned that Ottawa and Washington would be in a trade war “for the foreseeable future,” saying his country would not back down until US tariffs were fully lifted.

Since taking office in January, Trump has made a series of tariff threats on allies and adversaries alike, imposing levies on Canada, Mexico and China over illegal immigration and fentanyl concerns.