Canadian official, who threatened to shut off oil to US, fires back after Trump's tariffs

(CNN) — US Commerce Secretary Howard Lutnick said that President Donald Trump could announce a trade deal with Mexico and Canada as soon as tomorrow, just one day after the US imposed punishing tariffs on the two nations and sparked retaliatory levies.

“I think he’s going to work something out with them,” Lutnick said on Fox Business. “It’s not going to be a pause, none of that pause stuff, but I think he’s going to figure out, you do more, and I’ll meet you in the middle some way, and we’re going to probably be announcing that tomorrow.”

Trump’s policies have added uncertainty for the world’s biggest economy. The whipsaw application of tariffs and signs that perhaps that policy could change, all within a 24-hour span, have complicated decisions for businesses and increased pressure on an economy already showing signs of strain.

The White House imposed 25% across-the-board tariffs on Mexican imports and on nearly all Canadian imports early Tuesday.

Canadian Prime Minister Justin Trudeau swiftly announced plans to implement a 25% tariff on C$30 billion ($20.7 billion) of US goods immediately, followed by an additional C$125 billion ($86.2 billion) in 21 days’ time.

“This is a very dumb thing to do,” Trudeau said, in remarks that he said were directed at Trump. “There is absolutely no justification or need whatsoever for these tariffs today.”

Mexican President Claudia Sheinbaum said Tuesday that she would announce retaliatory tariffs on US imports on Sunday, noting at a news conference in Mexico City: “The unilateral decision made by the United States affects national and foreign companies operating in our country, as well as our people.”

Lutnick said he had spoken with both Canadian and Mexican representatives about trade among the three countries.

A Canadian government source confirmed to CNN that Canadian Finance Minister Dominic LeBlanc spoke with the US commerce secretary on Tuesday.

The 25% tariffs come after Trump also imposed an additional 10% tariff on Chinese goods, raising that country’s rate to 20%.

US stocks erased its gains after Trump acted on his threats Tuesday. After dropping by around 800 points in the morning, the Dow recouped its losses before plunging at the end of trading to close lower by around 670 points, or 1.55%, at 42,521. The broader S&P 500 fell 1.22% and the Nasdaq Composite fell 0.35%, paring some of its losses after dipping into correction territory earlier.

American farmers in jeopardy

The American Farm Bureau Federation’s president also warned Tuesday that Trump’s tariffs will “take a toll on rural America.”

“Farmers and ranchers are concerned with the decision to impose increased tariffs on imports from Canada, Mexico and China - our top trading partners,” said Zippy Duvall, who leads the organization.

Last year, the United States exported more than $83 billion in agricultural products to China, Canada and Mexico, according to the American Farm Bureau Federation.

“For the third straight year, farmers are losing money on almost every major crop planted. Adding even more costs and reducing markets for American agricultural goods could create an economic burden some farmers may not be able to bear,” said Duvall.

In 2018, during the first Trump administration, the US Department of Agriculture had to set up a Market Facilitation Program for farmers to offset financial losses on their crops due to China’s retaliatory tariffs.

CNN’s John Towfighi contributed to this report.

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