Star Metro - US signals possible exemptions in Canada, Mexico tariffs

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

Ottawa swiftly announced retaliatory tariffs, while Mexican President Claudia Sheinbaum plans to unveil her response at a mass rally on Sunday.

The US president has nominally cited illegal immigration and fentanyl trafficking in imposing the measures, though he frequently lambasts alleged trade imbalances when discussing the issue.

Some sectors such as automobiles are expected to be hit particularly hard by the tariffs, with parts crossing North American borders multiple times during production.

Trump is listening to "offers" from Canada and Mexico, Lutnick told Bloomberg Television on Wednesday.

He said he expects an announcement to be made Wednesday afternoon.

Lutnick dismissed the possibility of lifting the levies completely, but said Trump is mulling market segments where he could provide temporary relief.

"The president gets to make the decision," Lutnick said. "But our expectation is that it'll be categories."

"It will be 25 percent but it'll be, there will be some categories left out. It could well be autos, could be others as well," he said.

During Trump's first term, he renegotiated a free trade pact with Mexico and Canada, touting it at the time as the "fairest, most balanced, and beneficial trade agreement" in US history.

- 'Other trading partners' -

Sheinbaum, at her morning press conference Wednesday, said Mexico has to take "important decisions for the future of the country," adding that "if necessary, other trading partners will be sought."

Expressing a preference for a negotiated solution, she said she anticipates speaking to Trump by phone on Thursday about the tariffs.

She vowed retaliatory action and called for supporters to gather in Mexico City's main square on Sunday to hear details on her government's response.

Beyond the steep tariffs that took effect on Canada and Mexico, Lutnick maintained Wednesday that broader reciprocal tariffs, tailored to all US trading partners, are still coming on April 2.

The levies could affect Mexico and Canada further, addressing their broader trade with the United States, he said.

Trump has vowed "reciprocal tariffs" targeting friend and foe to remedy potential practices deemed as unfair.

While some of these duties could come immediately, Lutnick told Bloomberg that others could take "over a month or two to come online."

This week, Trump also inked an order doubling an additional tariff rate on Chinese imports from 10 percent to 20 percent, also over the country's alleged role in illicit fentanyl entering the United States.

The latest US duties pile atop existing ones on various Chinese products.

Beijing hit back swiftly, condemning Washington's "unilateral imposition" of levies and promising 10 percent and 15 percent tariffs on a range of US agricultural imports.

Economists warn that tariff hikes stand to bog down economic growth and add to inflation in the world's biggest economy.

The mounting trade war could complicate Trump's stated aims of bringing cost of living relief to households.

K.Evans--SMC