One day into tariff war, U.S. says de-escalation now possible
Less than a day after initiating a trade war with the firing of the opening shot, the Trump administration is already discussing the possibility of de-escalation. Commerce Secretary Howard Lutnick, who is leading the charge on tariffs, engaged in discussions with various levels of Canadian government officials on Tuesday in an attempt to find a way out of the escalating conflict.
While the outcome of these discussions remains uncertain, a phone call between Lutnick and Ontario Premier Doug Ford was described as tense by a senior Ontario government source. Additionally, Canadian federal officials have downplayed the likelihood of an immediate resolution to the tariffs issue. However, Lutnick himself expressed optimism during an interview with Fox Business Network, hinting at a potential compromise being considered by President Trump with Canada and Mexico.
Lutnick refrained from providing specific details but mentioned that Trump was exploring a middle-ground solution with the two countries. He emphasized that there would be no halt in tariffs and insisted that a compromise would be reached. When pressed for clarification, Lutnick redirected the conversation to the Canada-U.S.-Mexico trade agreement (CUSMA), hinting at the importance of adhering to the rules outlined in the agreement to avoid tariffs.
During the discussions, longstanding trade grievances between the U.S. and Canada, such as dairy trade restrictions and digital services taxes, were highlighted. Lutnick also raised concerns about Canada’s Goods and Services Tax, suggesting that it could become a point of contention in the renegotiation of CUSMA. The broader trade pact was referenced as a potential off-ramp in the escalating tariff dispute.
The ongoing tariff war has already begun to impact American markets and could pose a political challenge for Trump. Democrats have seized on the issue, framing it as a transfer of wealth from ordinary Americans to the wealthy. They argue that the tariffs will ultimately burden consumers and households, leading to economic consequences.
Amidst the escalating tensions, multinational companies are preparing legal challenges against Trump’s use of emergency powers to impose tariffs. Democrats are also pushing for a vote in Congress to overturn the tariffs on Canada and Mexico, though the likelihood of success remains uncertain.
Despite the uncertainty surrounding the trade dispute, Republicans are hopeful that Trump has a strategic plan to resolve the issue. Senate Majority Leader John Thune expressed concerns about the economic impact of the tariffs but remained optimistic that a resolution could be reached.
As discussions continue between the U.S. and its North American neighbors, the potential for a compromise and de-escalation of the trade war remains a possibility. The coming days will likely shed light on the direction of the negotiations and the future of trade relations between the countries.
