Trump administration signals that the tariffs against Canada and Mexico will soon have exemptions

WASHINGTON (AP) — Commerce Secretary Howard Lutnick said there might be carveouts coming to the 25% tariffs placed on Canada and Mexico by President Donald Trump, a sudden backing away after Tuesday's tax hike hurt the stock market, worried consumers and started a trade war.

In a Wednesday interview with Bloomberg Television, Lutnick said that Trump would update his tariff plans with an afternoon announcement, possibly sparing sectors such as autos from the import taxes.

On Tuesday, Trump put 25% taxes on imports from Mexico and Canada, taxing Canadian energy products such as oil and electricity at a lower 10% rate. The president also doubled the 10% tariff he placed on China to 20%. The administration has said the tariffs are about stopping the smuggling of drugs such as fentanyl, but Trump also suggested that the tariffs are about getting rid of persistent U.S. trade deficits.

The taxes almost immediately triggered retaliatory measures by Canada and China, with Mexico planning to announce its response on Sunday. The U.S. stock market has given up all of the gains since Trump's victory in last year's presidential election and consumers are already exhausted by inflation and worried the costs of the tax hike would lead to higher prices. Those concerns may have prompted Lutnick to signal a possible retreat in a Tuesday afternoon interview with the Fox Business Network.

“I think he’s going to figure out, you do more, and I’ll meet you in the middle in some way,” Lutnick told Fox Business Network, remarks that caused the stock market to pare its losses on the day.

But in his joint address to Congress on Tuesday night, Trump seemed intent on pushing forward with tariffs and talked up his plan for a “reciprocal” tax starting in April to match the tariffs, taxes and other subsidies provided by other countries.

The U.S. president tried to play down the possible economic harm as “a little disturbance,” as the administration has suggested that the estimates of higher inflation and slower growth in most outside economic forecasts are overblown..

“It may be a little bit of an adjustment period,” he said after claiming that farmers would benefit from reciprocal tariffs on countries that have tariffs on U.S. exports. “You have to bear with me again and this will be even better.”