Less than a day after firing the opening shot in a trade war, the Trump administration is now talking about de-escalation.
U.S. President Donald Trump’s point man on tariffs, Commerce Secretary Howard Lutnick, spoke to officials at different levels of Canadian government about finding an off-ramp Tuesday.
It’s not clear how likely they are to end the tariffs: a Lutnick phone call with Ontario Premier Doug Ford was described as “tough” in tone by a senior Ontario government source, and Canadian federal officials, separately, downplayed talk of an imminent deal.
But Lutnick himself sounded optimistic in an interview with Fox Business Network. He said Trump was considering some sort of compromise with Canada and Mexico.
“I think he’s gonna work something out with them,” said Lutnick, who spoke on more than one occasion Tuesday with Finance Minister Dominic LeBlanc. “We’re probably gonna be announcing that tomorrow.”
Trump ally links issue to CUSMA review
He was vague on the details. Lutnick insisted there would be no pause in tariffs, and repeated twice that Trump would find some sort of compromise with Canada and Mexico: “Somewhere in the middle.”
When pressed to explain what that meant, and whether he was referring to a smaller tariff, Lutnick turned the conversation to a new topic — the Canada-U.S.-Mexico trade agreement (CUSMA).
That agreement must, by law, be renegotiated within a decade sometime after 2025, but it’s clear the U.S. wants an accelerated timeline.
Lutnick said countries that abide by the rules of the trade agreement would be spared tariffs and went on to list perennial gripes the U.S. has with Canada: mostly closed dairy trade, and the Trudeau government’s digital services tax.
He also repeated a recent complaint about the Goods and Services Tax, suggesting the design of that sales tax might also become an irritant in the renegotiation.
A senior Ontario government source confirmed that the broader continental trade pact was part of the conversation; that senior provincial official was in the room with Ford and said the call ended with a reference to CUSMA, known in the U.S. as USMCA.
“Lutnick was vague but seemed to be pointing to USMCA as an offramp,” said the source, who requested anonymity to discuss sensitive talks. “No specific commitments or next steps [were made].”
The Ford-Lutnick call was first reported in the Globe and Mail.
The source told CBC News that Lutnick was clearly trying to get Canadians to de-escalate, as Canada implements counter-tariffs and Ford has made dramatic threats, including putting an export tax on electricity.
The continent-wide tariff war has swiftly roiled American markets and risks turning into a political headache for Trump.
On a day when the president planned to make a triumphal speech to Congress, American news media were reporting the souring economic mood. And Democrats who have been stumbling around in search of a clear message since the election are testing one on tariffs.
Lutnick was among the guests during Prime Minister Justin Trudeau’s dinner at Mar-a-Lago late last year. (@DaveMcCormickPA/X)
Political blowback starts in the U.S.
The Democratic response to Trump’s speech was scheduled to be delivered by a senator from Michigan, Elissa Slotkin, the U.S. state that risks being most heavily battered by tariffs.
A top Democrat uttered the party’s emerging message to voters: That this is a transfer of wealth from ordinary Americans to wealthy Americans.
President Trump wants tax cuts for billionaires, and to pay for it, he’ll collect tariffs on the goods ordinary people buy, is how that argument goes.
Chuck Schumer, the Democrats’ leader in the Senate, made that case in a speech in the Senate Tuesday, saying tariffs are fine for certain purposes, but not for this.
“The situation today is completely different. It makes no sense to start a trade war with America’s closest trade partners,” Schumer said.
“The casualty of that trade war will be consumers and American households.”
He ridiculed the idea that fentanyl from Canada was the real impetus for these tariffs. To impose the tariffs, Trump declared fentanyl deaths a national emergency and used it to invoke the International Emergency Economic Powers Act of 1977.
WATCH | How Canada is responding to Trump’s tariffs on Canadian goods: 
After U.S. President Donald Trump imposed devastating 25 per cent tariffs on nearly all Canadian goods, Canada is retaliating. Prime Minister Justin Trudeau has already levied tariffs on $30 billion worth of U.S. products, with plans for an additional $125 billion in three weeks. Andrew Chang explains Canada’s strategy to pressure Trump into changing course. Images provided by Getty Images, Reuters and The Canadian Press.
Lawyers for multinational companies are preparing to argue in court that Trump abused the law and that fentanyl deaths were a false pretext.
They can point to the president’s own words that he’s mostly tightened the border already, and the words of his aides praising Canada and Mexico’s actions to halt the cross-border flow of fentanyl.
Democrats have also drafted a motion aimed at forcing a vote in Congress to knock down the tariffs on Canada and Mexico — which is a long shot.
But if Lutnick is right, all of this might be moot by Wednesday. And the countries might move on to other irritants: Trump’s litany of other tariff threats, and the review of CUSMA.
Republicans expressed confidence that Trump had a secret strategy. Or rather, they hoped so. Republican Senate Majority Leader John Thune told CNN he’s worried about the economic effect of these tariffs.
“I think the president is looking at this as a means to an end. I don’t think it’s the end itself,” Thune said.
“I certainly hope it isn’t.”
