U.S. Commerce Secretary Hints at Tariff Relief Announcement Around the 5th
"If Rules Are Followed, Relief Measures Will Be Considered"
Trump's Reckless Tariff Rampage
Global Trade War and Economic Uncertainty Expand
Amid the intensifying 'Trump-originated tariff war,' the United States has left open the possibility of compromise just one day after imposing a 25% tariff barrage on Canada and Mexico. Attention is focused on whether the trade war, which has escalated as countries retaliate with counter-tariffs against U.S. President Donald Trump's tariff policies, can be partially eased. However, with the U.S. planning to impose reciprocal tariffs and item-specific tariffs one after another, and given President Trump's 'reckless' rampage style of first dropping tariff bombs to corner opponents before stepping back, the likelihood of halting this escalation is low, increasing concerns over the global trade war and economic uncertainty.
U.S. Commerce Secretary: "Tariff Relief Measures for Mexico and Canada to be Announced Around the 5th"… Suggests Possibility of Compromise Amid Escalating 'Trump-Originated Tariff War'
On the 4th (local time), U.S. Secretary of Commerce Howard Lutnick said in an interview with Fox News, "Both Mexico and Canada tried to show during calls with me today that they can do better," and indicated that some relief measures related to the 25% tariffs, which took effect at midnight that day, could be announced as early as the 5th. He added, "(President Trump) is very fair and reasonable, so he is listening," and "Therefore, I think he will cooperate with them."
However, he drew a line regarding the possibility of tariff suspension for Canada and Mexico. Secretary Lutnick stated, "It is not a temporary suspension, but he will find a middle ground," and "We will probably announce it tomorrow." He specifically referenced the United States-Mexico-Canada Agreement (USMCA), the free trade agreement among the three North American countries, saying, "If you follow the rules, the president is considering offering relief to you," and "If you do not follow the rules, you will have to pay tariffs."
Lutnick's remarks came amid the intensifying tariff war, with the U.S. pushing forward tariff measures against Canada, Mexico, and China, prompting retaliatory actions. The U.S. enforced the 25% tariffs on Canada and Mexico, which had been postponed for a month, starting at midnight that day. Regarding China, the U.S. raised the additional tariff rate to a total of 20%, adding another 10% on top of the 10% imposed on the 4th of last month.
Countries immediately retaliated. Canada decided to impose 25% retaliatory tariffs on U.S. imports worth a total of 155 billion Canadian dollars (approximately 156 trillion KRW), with tariffs on imports worth 30 billion Canadian dollars (approximately 30 trillion KRW) taking effect immediately that day. China promptly announced it would implement tariffs of up to 15% on U.S. agricultural, livestock, and seafood products starting on the 10th. Mexican President Claudia Sheinbaum also stated that "We will respond with tariff and non-tariff measures," and announced plans to present specific measures on the 9th.
Sharp criticisms among leaders also poured out. Canadian Prime Minister Justin Trudeau directly criticized President Trump, saying, "What he wants is the complete collapse and subsequent merger of the Canadian economy," and "That will never happen." The imposition of tariffs on Canada is criticized as part of President Trump's grand plan, who has repeatedly mentioned that Canada should become the 51st state of the U.S. Trump escalated further by saying, "Tell Trudeau of Canada to explain," and warned, "If he imposes retaliatory tariffs on the U.S., our reciprocal tariffs will immediately be raised to the same level," threatening additional retaliatory tariffs.
Trump's 'Madman'-like Tariff Rampage... Global Trade War and Stagflation Fears Spread
The U.S. leaving open the possibility of tariff negotiations with Canada and Mexico is analyzed as due to the highly integrated economies of the three North American countries, making it difficult for the U.S. to avoid damage. Canada and Mexico, which depend on exports to the U.S. for 80% of their trade, are expected to face direct hits such as massive layoffs and economic recession due to the tariff measures, while concerns are growing that the U.S. itself could fall into stagflation (economic slowdown accompanied by rising prices).
According to U.S. insurance company Nationwide, if the tariffs imposed by President Trump on Canada, Mexico, and China, along with retaliatory tariffs by those countries, remain in place throughout 2025, the U.S. GDP growth rate this year is estimated to drop by 1 percentage point, and inflation is expected to rise by 0.6 percentage points. Evercore ISI forecasts a 1 percentage point decline in U.S. GDP growth this year, and Yale University's Budget Lab projects U.S. inflation to rise by 1.2 percentage points next year. Since the three North American countries apply mostly tariff-free trade under the USMCA and have tightly intertwined supply chains, there are many views that it is difficult even to predict the chaos that will ensue.
Signs of contraction in the U.S. manufacturing sector are also emerging as companies delay investments due to tariff uncertainties originating from Trump. The Institute for Supply Management (ISM) reported in its February Manufacturing Purchasing Managers' Index (PMI) released the day before that "customers (companies) are halting new orders due to tariff uncertainties," and "the administration has not provided clear guidelines regarding the implementation of tariffs, making it harder to predict the impact on business." According to Goldman Sachs, tariffs were mentioned 20 times in this report, five times more than the four mentions in January. Corporate concerns are also growing. U.S. retailer Target hinted at the possibility of stagnant sales this year due to tariff increases, and electronics retailer Best Buy warned that tariff costs are passed on to retailers, potentially leading to higher consumer prices.
In the market, fears are spreading that the global economy could fall into stagflation due to President Trump's 'madman'-like tariff rampage. Trump has announced tariffs not only by country but also reciprocal tariffs and item-specific tariffs on semiconductors, automobiles, and pharmaceuticals. The indiscriminate protectionism prioritizing U.S. interests regardless of allies or adversaries is causing the collapse of the global trade order based on free trade, raising concerns that global economic growth rates could slow down.
Andrew Wilson, Secretary-General of the International Chamber of Commerce (ICC), warned, "We are heading into a very precarious situation that will darken the global economy in the coming months," and "If the U.S. does not withdraw its high tariffs on imports, the global economy could experience a collapse similar to the Great Depression of the 1930s."
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