BofA: U.S. tariffs remain 'alive and dead' at the same time

Investing.com -- Bank of America analysts described the current U.S. tariff situation as both “alive and dead” at the same time, noting that tariff uncertainty is likely to persist until a renegotiation of USMCA takes place.

The US imposed 25% tariffs on Canadian and Mexican imports (10% on Canadian energy) on March 4.

Canada and Mexico responded with differing approaches. “Prime Minister Trudeau said at his press conference that the US launched a trade war against Canada, saying that ‘there is absolutely no justification or need whatsoever for these tariffs,’” wrote BofA. 

In response, Canada imposed “25% tariffs against CA$30bn (US$21bn) worth of American goods effective immediately, and will impose tariffs on an additional CA$125bn (US$87bn) worth of goods in 21 days’ time.” 

Canada also announced additional measures, including “a 25% tariff on power exports from Ontario to the US.”

Mexico has taken a more measured stance. “President Claudia Sheinbaum commented that there is ‘no justification’ for the tariffs, as Mexico delivered results on fentanyl and security,” noted the bank. 

While countermeasures are expected, Sheinbaum stated that they “would come in the form of tariff and non-tariff measures on Sunday, March 9.”

Meanwhile, U.S. Secretary of Commerce Howard Lutnick suggested that relief could come soon. BofA wrote: “He discarded a pause but stated that if Canada and Mexico do more (in terms of fentanyl), then President Trump would meet them somewhere in the middle.”

BofA concluded, “We believe that these developments are consistent with our view that tariffs are likely temporary, and that threats of tariffs on Canada and Mexico will last until a new USMCA 2.0 is renegotiated.”