Trump Aides Hunt for 11th-Hour Deal to Dial Back Canada-Mexico Tariffs
Wall Street Journal
By Gavin Bade, Vipal Monga, and Santiago Pérez
Updated Jan. 30, 2025 9:40 pm ET
President Trump’s advisers are considering several offramps to avoid enacting the universal tariffs on Mexico and Canada that he had pledged, according to people familiar with the matter, even as he reiterated Thursday that the tariffs are coming.
The situation is fluid and Trump still may go through with his vow to slap 25%, across-the-board levies on imports from America’s two largest trading partners. The president has consistently said he would do so by Saturday.
But amid ongoing negotiations with Canada and Mexico, the administration appears undecided on whether to impose tariffs on all imports from those countries, the people familiar with the matter said, adding that administration officials are preparing to opt for more targeted measures instead.
Trump is still likely to announce some sort of trade action by Saturday, but it may only affect certain sectors, such as steel and aluminum. Trump may also include major exemptions, such as oil. And the tariffs could be issued using existing legal authorities instead of more novel approaches officials had previously floated, according to people with knowledge of discussions, who stressed that no final decisions have been made.
The administration could also announce new tariffs by Saturday, but with a grace period before they are implemented, allowing negotiations to continue with the continental neighbors, some of the people said.
Trump said he would decide, likely Thursday evening, whether the tariffs will apply to imports of Mexican and Canadian oil.
“I’ll be putting the tariff of 25% on Canada, and separately, 25% on Mexico, and we’ll really have to do that,” Trump said, adding that the duties could rise over time.
The U.S. has been engaged in weeks of frantic negotiations with Canada and Mexico, as well as lobbying by North American businesses and labor groups that have argued the across-the-board tariffs would snarl continental supply chains, drive up prices, and increase reliance on trade with adversarial regimes such as China and Venezuela.
Trump has said the tariffs will take effect if the countries don’t take steps to stop migration and drug trafficking over U.S. borders. The administration has considered using emergency economic powers established by a 1970s-era law to impose those tariffs, as Trump threatened last Sunday against Colombia over a migration disagreement, before backing down when he said his demands were met.
Tariffs have never before been deployed under that act, though President Richard Nixon imposed emergency tariffs under a predecessor law.
Some officials are now concerned about using emergency powers for tariffs after a federal judge earlier this week temporarily blocked a White House Office of Management and Budget memo that sought to freeze federal grants and loans. The court said the order may have violated federal law requiring the president to spend funding approved by Congress.
The injunction on the OMB action has caused some White House officials to second guess their plans to impose tariffs under the International Emergency Economic Powers Act, said people familiar with planning. Policymakers don’t want to risk having an IEEPA action enjoined now, when they may potentially use it in the future on other countries.
The White House didn’t immediately respond to requests for comment.
Trump’s nominee for Commerce Secretary, Howard Lutnick, told lawmakers Wednesday that if Canada and Mexico comply with Trump’s demands to curtail migration and drug smuggling “there will be no tariffs,” and framed the threat of duties as a cudgel to get those governments to act.
“It’s not a tariff per se,” Lutnick said. “It’s an act of domestic policy.”
Administration officials have said publicly that Canada and Mexico are making progress toward meeting Trump’s demands, which, ostensibly, would allow them to avoid immediate tariffs.
Canadian officials were encouraged by Lutnick’s testimony, said one senior government official.
The Canadian minister responsible for the border, David McGuinty, said Wednesday that the government is in negotiations with the U.S. over creating a new “North American fentanyl strike force.” If finalized, the task force will involve more investment in people and infrastructure, he said, although he didn’t provide additional details.
Mexico has created a similar working group with the Trump administration on migration issues that will later be expanded to cover other areas of the U.S.-Mexico relationship, Mexican President Claudia Sheinbaum said Monday. U.S. officials said her government is cooperating with Trump’s demands on the southern border, and has agreed to receive expelled non-Mexican migrants seeking asylum in the U.S., a significant concession to the Trump administration.
Those efforts have coincided with an intense pressure campaign from American industries and unions reliant on supply chains that cross U.S. borders, including the automotive sector and steelworkers. This week, the United Steelworkers, a powerful union whose members helped elect Trump across the industrial Midwest, called on Trump to back away from across-the-board tariffs.
Behind closed doors, the steelworkers union has stressed the importance of Canadian oil to many of its members, pointing out that about 30,000 steelworkers are employed by oil refineries that use Canadian crude, oil that could be replaced by imports from other countries, including Venezuela, if Canadian oil becomes too expensive.
The steel industry and outside trade advisers to Trump, meanwhile, have been pushing him to restore tariffs on Mexican and Canadian steel and aluminum, which were lifted in 2019 during the negotiations for the U.S.-Mexico-Canada free trade agreement.
The industry has long complained about surging steel imports from the two countries harming U.S. mills. This week the Coalition for Prosperous America, a protectionist trade group that is advising Trump’s trade policies, delivered him a list of options to apply tariffs under Section 232 of the Trade Expansion Act, a tried and tested legal authority that would pose less risk than deploying IEEPA.
While reinstating steel tariffs could avoid the worst consequences of across-the-board tariffs, it is not without risk. In 2018 Mexico responded to U.S. tariffs on steel and aluminum with tariffs of its own, which targeted U.S. products ranging from steel to pork, cheeses, apples and bourbon, focusing on Republican strongholds.
Mexico’s Economy Minister Marcelo Ebrard said Wednesday that Sheinbaum’s cabinet has studied possible retaliatory measures during weekly meetings for the past eight months.
“I can’t reveal what’s planned, but you can be sure that we have studied it very carefully,” he said.
Trump added to his tariff threats on Thursday night, warning so-called the Brics group—whose members include Brazil, Russia, India, China, South Africa and other developing economies—he would seek 100% tariffs if they try to find an alternative to the dollar as the dominant currency underpinning global trade.
“We are going to require a commitment from these seemingly hostile Countries that they will neither create a new BRICS Currency, nor back any other Currency to replace the mighty U.S. Dollar or, they will face 100% Tariffs, and should expect to say goodbye to selling into the wonderful U.S. Economy,” Trump wrote on his Truth Social platform.
By Gavin Bade, Vipal Monga, and Santiago Pérez
Updated Jan. 30, 2025 9:40 pm ET
President Trump’s advisers are considering several offramps to avoid enacting the universal tariffs on Mexico and Canada that he had pledged, according to people familiar with the matter, even as he reiterated Thursday that the tariffs are coming.
The situation is fluid and Trump still may go through with his vow to slap 25%, across-the-board levies on imports from America’s two largest trading partners. The president has consistently said he would do so by Saturday.
But amid ongoing negotiations with Canada and Mexico, the administration appears undecided on whether to impose tariffs on all imports from those countries, the people familiar with the matter said, adding that administration officials are preparing to opt for more targeted measures instead.
Trump is still likely to announce some sort of trade action by Saturday, but it may only affect certain sectors, such as steel and aluminum. Trump may also include major exemptions, such as oil. And the tariffs could be issued using existing legal authorities instead of more novel approaches officials had previously floated, according to people with knowledge of discussions, who stressed that no final decisions have been made.
The administration could also announce new tariffs by Saturday, but with a grace period before they are implemented, allowing negotiations to continue with the continental neighbors, some of the people said.
Trump said he would decide, likely Thursday evening, whether the tariffs will apply to imports of Mexican and Canadian oil.
“I’ll be putting the tariff of 25% on Canada, and separately, 25% on Mexico, and we’ll really have to do that,” Trump said, adding that the duties could rise over time.
The U.S. has been engaged in weeks of frantic negotiations with Canada and Mexico, as well as lobbying by North American businesses and labor groups that have argued the across-the-board tariffs would snarl continental supply chains, drive up prices, and increase reliance on trade with adversarial regimes such as China and Venezuela.
Trump has said the tariffs will take effect if the countries don’t take steps to stop migration and drug trafficking over U.S. borders. The administration has considered using emergency economic powers established by a 1970s-era law to impose those tariffs, as Trump threatened last Sunday against Colombia over a migration disagreement, before backing down when he said his demands were met.
Tariffs have never before been deployed under that act, though President Richard Nixon imposed emergency tariffs under a predecessor law.
Some officials are now concerned about using emergency powers for tariffs after a federal judge earlier this week temporarily blocked a White House Office of Management and Budget memo that sought to freeze federal grants and loans. The court said the order may have violated federal law requiring the president to spend funding approved by Congress.
The injunction on the OMB action has caused some White House officials to second guess their plans to impose tariffs under the International Emergency Economic Powers Act, said people familiar with planning. Policymakers don’t want to risk having an IEEPA action enjoined now, when they may potentially use it in the future on other countries.
The White House didn’t immediately respond to requests for comment.
Trump’s nominee for Commerce Secretary, Howard Lutnick, told lawmakers Wednesday that if Canada and Mexico comply with Trump’s demands to curtail migration and drug smuggling “there will be no tariffs,” and framed the threat of duties as a cudgel to get those governments to act.
“It’s not a tariff per se,” Lutnick said. “It’s an act of domestic policy.”
Administration officials have said publicly that Canada and Mexico are making progress toward meeting Trump’s demands, which, ostensibly, would allow them to avoid immediate tariffs.
Canadian officials were encouraged by Lutnick’s testimony, said one senior government official.
The Canadian minister responsible for the border, David McGuinty, said Wednesday that the government is in negotiations with the U.S. over creating a new “North American fentanyl strike force.” If finalized, the task force will involve more investment in people and infrastructure, he said, although he didn’t provide additional details.
Mexico has created a similar working group with the Trump administration on migration issues that will later be expanded to cover other areas of the U.S.-Mexico relationship, Mexican President Claudia Sheinbaum said Monday. U.S. officials said her government is cooperating with Trump’s demands on the southern border, and has agreed to receive expelled non-Mexican migrants seeking asylum in the U.S., a significant concession to the Trump administration.
Those efforts have coincided with an intense pressure campaign from American industries and unions reliant on supply chains that cross U.S. borders, including the automotive sector and steelworkers. This week, the United Steelworkers, a powerful union whose members helped elect Trump across the industrial Midwest, called on Trump to back away from across-the-board tariffs.
Behind closed doors, the steelworkers union has stressed the importance of Canadian oil to many of its members, pointing out that about 30,000 steelworkers are employed by oil refineries that use Canadian crude, oil that could be replaced by imports from other countries, including Venezuela, if Canadian oil becomes too expensive.
The steel industry and outside trade advisers to Trump, meanwhile, have been pushing him to restore tariffs on Mexican and Canadian steel and aluminum, which were lifted in 2019 during the negotiations for the U.S.-Mexico-Canada free trade agreement.
The industry has long complained about surging steel imports from the two countries harming U.S. mills. This week the Coalition for Prosperous America, a protectionist trade group that is advising Trump’s trade policies, delivered him a list of options to apply tariffs under Section 232 of the Trade Expansion Act, a tried and tested legal authority that would pose less risk than deploying IEEPA.
While reinstating steel tariffs could avoid the worst consequences of across-the-board tariffs, it is not without risk. In 2018 Mexico responded to U.S. tariffs on steel and aluminum with tariffs of its own, which targeted U.S. products ranging from steel to pork, cheeses, apples and bourbon, focusing on Republican strongholds.
Mexico’s Economy Minister Marcelo Ebrard said Wednesday that Sheinbaum’s cabinet has studied possible retaliatory measures during weekly meetings for the past eight months.
“I can’t reveal what’s planned, but you can be sure that we have studied it very carefully,” he said.
Trump added to his tariff threats on Thursday night, warning so-called the Brics group—whose members include Brazil, Russia, India, China, South Africa and other developing economies—he would seek 100% tariffs if they try to find an alternative to the dollar as the dominant currency underpinning global trade.
“We are going to require a commitment from these seemingly hostile Countries that they will neither create a new BRICS Currency, nor back any other Currency to replace the mighty U.S. Dollar or, they will face 100% Tariffs, and should expect to say goodbye to selling into the wonderful U.S. Economy,” Trump wrote on his Truth Social platform.
