US commerce secretary Howard Lutnick has indicated that some sectors may be “left out” of tariffs imposed on Canada and Mexico, sending shares in carmakers higher.
Lutnick said US President Donald Trump was considering which sectors could potentially be given some relief from the 25 per cent tariffs, which took effect on Tuesday.
“What he is thinking about is which sections of the market that can maybe — maybe he’ll consider giving them relief,” he said.
“My thinking is it’s going to be somewhere in the middle, so not 100 per cent of all products and not none . . . Mexico and Canada are trying their best and let’s see where we end up,” he added.
An announcement was due later in the day, Lutnick told Bloomberg TV on Wednesday, in comments that helped trigger a Wall Street rally after a share slump the previous day.
The commerce secretary said the administration was looking at compliance with the 2020 US-Mexico-Canada Agreement’s rules of origin, including for automakers.
While some sectors would still face a 25 per cent tariff, Lutnick said, others could see some relief. “It could be autos, it could be others as well,” he added.
He emphasised the Trump administration’s complaints that Mexico and Canada had failed to clamp down on the trafficking of the deadly opioid fentanyl and suggested that any reprieve could last just a month.
“If they can stop the flow of fentanyl, the president is open-minded,” Lutnick said. “There are going to be tariffs, let’s be clear . . . Maybe, maybe he’ll consider giving them relief until we get to April 2.”
That is the date when Trump is due to announce “reciprocal” tariffs against a wider range of US trading partners and allies.
Trump’s tariffs have triggered steep retaliation from Ottawa and thrown the relationship between the US, Mexico and Canada into disarray.
They are particularly significant for carmakers, which often shift components between the three countries during the production process.
Lutnick, the former chief executive of financial services group Cantor Fitzgerald, has emerged as Trump’s top negotiator in the trade stand-off with Canada and Mexico, even as other officials such as Peter Navarro, the hawkish White House adviser on manufacturing policy, wield influence.
In a sign of the tensions raised by the incipient trade war, outgoing Prime Minister Justin Trudeau will not lift Canada’s retaliatory tariffs if Washington maintains any levies on Ottawa, a senior government adviser told the Financial Times.
Lutnick said it was his understanding that three US carmakers — Ford, General Motors and the Stellantis-owned Chrysler — were all compliant with the rules of origin set out under the USMCA.
“If you complied with the agreement, then maybe you avoid tariffs,” Lutnick added. “And if you didn’t comply with the agreement, well, you did so at your own risk. You knew you weren’t complying.”
Shares in GM jumped almost 4 per cent on Wednesday while Ford was up about 3 per cent. Shares in Stellantis climbed 5 per cent.
The rally regained much of the ground that carmakers’ stocks had lost the previous day, when the tariffs were imposed.
Analysts at Bernstein had singled out GM as being the most exposed US carmaker to the levies. It estimated that the company would suffer a $6.7bn drop in cash flows next year, compared with $2.9bn for Ford and €3.5bn for Milan-listed Stellantis.
European brands, many of which export vehicles from Canada and Mexico for sale in the US, have also been affected, with Volkswagen’s shares bouncing back 3.5 per cent in early trading on Wednesday after falling the day before.
The US president ordered his trade advisers last month to come up with new tariffs on a “country-by-country” basis in retaliation against levies, subsidies, taxes and regulations deemed unfair by Washington.
White House officials suggested that Brazil, India, Japan and the EU were at particular risk of facing extra duties.
A fuller renegotiation of the USMCA would take place next year, Lutnick said.
On Tuesday, Trudeau described Trump’s tariffs on Canadian goods as “a very dumb thing to do” and unleashed an immediate 25 per cent tariff on C$30bn (US$21bn) of US imports.
Speaking on Fox News on Wednesday morning, US Treasury secretary Scott Bessent called Trudeau, who resigned this year after almost a decade in power, a “lame duck” and “a dead man walking”.
Mexican President Claudia Sheinbaum, who has delayed the announcement of Mexico’s retaliation until Sunday, said she expected to speak with Trump on Thursday morning.
Additional reporting by Ilya Gridneff