Trump team threatens two phases of tariffs on Canada

The United States is considering implementing a two-stage tariff plan that could potentially impact trade with Canada and Mexico. The plan involves imposing initial trade penalties in the coming days, followed by broader penalties later this spring.

The details of this plan were revealed during a confirmation hearing for Howard Lutnick, the nominee for commerce secretary under President Donald Trump. Lutnick discussed the two-step approach with Michigan Senator Gary Peters, who expressed concerns about the potential consequences of a trade war on his state.

The first phase of the plan is aimed at addressing the fentanyl crisis, with Lutnick emphasizing the need for Canada and Mexico to take action to stop the flow of drugs into the United States. While only a small percentage of illegal drugs entering the U.S. come from the northern border, officials are concerned about the increasing drug production in Canada and the lack of enforcement against criminal organizations.

Canada and Mexico have begun implementing measures to address these concerns, but there is still uncertainty about the possibility of tariffs being imposed on February 1st. Canadian officials have been engaging with their American counterparts to try and prevent this from happening, but the response has been lukewarm.

Lutnick suggested that if Canada and Mexico demonstrate significant progress in addressing these issues, tariffs may be avoided. However, if they fail to do so, tariffs could be imposed as early as February 1st.

Looking ahead, the U.S. is also considering broader tariff options to be implemented by April 1st. Lutnick mentioned specific areas of concern, such as dairy and auto manufacturing, with a focus on increasing U.S. dairy exports to Canada and bringing back auto manufacturing jobs to states like Michigan and Ohio.

Overall, even if Canada and Mexico manage to avoid immediate tariffs, the threat of trade penalties will continue to loom over the relationship between the three countries in the coming months. It is clear that the U.S. is intent on addressing trade issues with its neighbors and ensuring a fair and balanced trade relationship moving forward.