United States President Donald Trump’s pick to lead the Commerce Department said Mexico and Canada can avoid new tariffs due this weekend if they clamp down on border security — while also signalling that Trump is likely to impose widespread new levies to return manufacturing to U.S. soil.

The testimony from Howard Lutnick, during his confirmation meeting Wednesday, provides the latest clues of how the Trump administration will rollout a flurry of threatened new levies.

Lutnick distinguished between different tariff approaches. Trump has ordered a study of overall trade issues and tariffs to be finished by April 1. Lutnick described that process as broader, while saying the immediate 25 per cent tariffs Trump has pledged on those two countries as soon as Feb. 1 is related to migration and fentanyl issues along their borders into the U.S.

“If we are your biggest trading partner, show us the respect, shut your border,” he said of Trump’s Feb. 1 threat. “This is a separate tariff to create action from Mexico and action from Canada. And as far as I know, they are acting swiftly, and if they execute it, there will be no tariff. And if they don’t, then there will be.”

Lutnick also told senators he preferred “across-the-board” tariffs rather than aiming them at particular products in a tit-for-tat exchange. “My way of thinking, and I discussed this with the president, is country-by-country. Macro. Let America make it more fair. We are treated horribly by the global trading environment.”

He added that it’s “nonsense” that tariffs drive inflation, while conceding the price of some individual products may rise.

“This is not inflationary,” he said. “It is just nonsense that tariffs cause inflation.”

Trump has pledged three broad buckets of tariffs, though it’s not yet clear whether, when and at what scale they’ll be implemented. He picked Lutnick to lead his tariff and trade agenda in his role as Commerce Secretary, if confirmed.

First, Trump pledged tariffs of 25 per cent on Canada and Mexico as soon as Feb. 1, a date that Press Secretary Karoline Leavitt said Monday remains in place. Trump has also said he may impose 10 per cent tariffs on China that same day, though Leavitt demurred on whether he would.

Secondly, Trump has also pledged tariffs on particular sectors, including semiconductor chips, pharmaceutical drugs, steel, aluminum and copper.

Lastly, Trump has also mused about a universal tariff hitting all imports. He said Monday he’d want one that’s higher than 2.5 per cent, though didn’t specify a target. He has mused about universal tariffs as high as 20 per cent.

Much of Lutnick’s early questioning focused on other subjects, but he raised Canada’s dairy system as an example of a problem he wants to address.

“Canada, as we spoke about, treats our dairy farmers horribly,” Lutnick told Senator Tammy Baldwin, a Democrat from the dairy producing battleground state of Wisconsin. “That’s got to end.”

Bloomberg.com