(Bloomberg) — The Trump administration could announce a pathway for tariff relief on Mexican and Canadian goods covered by North America’s free trade agreement as soon as Wednesday, Commerce Secretary Howard Lutnick said.

“Both the Mexicans and the Canadians were on the phone with me all day today trying to show that they’ll do better, and the president’s listening, because you know he’s very, very fair and very reasonable,” Lutnick said Tuesday in an interview with Fox Business. “So I think he’s going to work something out with them — 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 announcing that tomorrow.”

Lutnick did not explicitly say what actions President Donald Trump was considering after imposing an across-the-board tariff on all goods from Canada and Mexico that went into effect overnight, tied to the flow of fentanyl and migrants into the US. Lutnick said that the tariffs would likely land “somewhere in the middle,” with Trump “moving with the Canadians and Mexicans, but not all the way.” 

Lutnick discounted the notion that the tariffs would be fully rolled back, pointing instead to the US-Mexico-Canada trade pact negotiated during Trump’s first term.

“If you live under those rules, then the president is considering giving you relief,” Lutnick said. “If you haven’t lived under those rules, well, then you have to pay the tariff.”

Earlier: Trump’s Widening Tariff War Sparks Quick Retaliation on US 

Lutnick’s comments marked the first public signal from Trump’s team since the duties were imposed that the president may be wavering on his decision to enact the largest set of new US tariffs in nearly a century. 

Trump earlier Tuesday gave little indication he was willing to consider exemptions for certain Mexican and Canadian imports. He said moves by Prime Minister Justin Trudeau to retaliate with countermeasures would cause US reciprocal tariffs to “increase by a like amount,” derisively referring to the Canadian leader as “governor.” 

Stocks dipped globally following the administration’s announcement. From New York to London and Tokyo, equities sank — with the S&P 500 losing 1.2% on the day, returning to pre-election levels. 

Auto and bank stocks jumped in postmarket trading following Lutnick’s comments, while Canadian heavy crude strengthened. 

Democrats and Republicans on Capitol Hill, including some reliable Trump allies, urged the president to reconsider his plan, saying the charges could drive up costs for American consumers and hurt key sectors like agriculture and automobiles. Canada and Mexico both announced plans to slap retaliatory tariffs on US imports.

“It is my hope that the tariffs against Canada and Mexico will not remain in effect for an extended period of time,” Texas Republican Senator Ted Cruz told reporters earlier Tuesday. “It is my hope these tariffs will act as the incentive that President Trump said they are designed to be, and as a consequence, the president will lift the tariffs.”

Trump previously delayed the Canada and Mexico tariffs for a month before allowing them to move forward. The president on Monday said there was “no room left” for the two countries to put off the duties, as they did in February. 

Auto companies stand to gain from a potential tariff compromise. 

Detroit’s automakers have sought to convince Trump to spare them from the levies, arguing that vehicles made in North America that adhere to parts-content requirements under the US-Mexico-Canada agreement and thus should be exempt from any new duties.

US auto executives and lobbyists have criticized the prospect of taxing imports from Canada and Mexico as unfairly punitive to domestic carmakers, whose supply chains and factories are concentrated in North America. 

Car prices were poised to jump as much as $12,000 due to the tariffs, according to the Anderson Economic Group. 

—With assistance from Erik Wasson, Keith Naughton and Gabrielle Coppola.

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