North American tariff off ramp? And China talks still on the table?

After sending markets into full-scale panic mode, the Trump administration is now signaling a possible off-ramp for its tariff onslaught against Canada and Mexico. Commerce Secretary Howard Lutnick hinted that a relief pathway could be unveiled as early as Wednesday, giving markets a much-needed dose of optimism.

"Both the Mexicans and the Canadians were on the phone with me all day today," Lutnick said in an interview with Fox Business, suggesting that Trump is open to a deal—but on his terms. There won’t be a full pause, but rather a "meet me halfway" approach. This is a stark contrast to Trump’s hardline stance just a day ago, when he dismissed Canada’s retaliatory tariffs and mockingly referred to Prime Minister Justin Trudeau as "Governor."

Lutnick’s carefully worded pivot didn’t go unnoticed. Auto and bank stocks ripped higher in postmarket trading.

The auto industry is now at the center of the debate. Detroit’s Big Three have been lobbying hard for exemptions, arguing that cars built under the USMCA agreement should be spared. With tariffs threatening to drive car prices up by as much as $12,000, industry pressure is mounting for a deal that doesn’t crush supply chains.

Meanwhile, China is playing its cards carefully. After Washington imposed an additional 10% tariff on March 4, Beijing retaliated with targeted agricultural tariffs and an expanded Unreliable Entities List. But the response was less severe than expected, leaving the door open for negotiations.

Markets took the measured counterpunch as a positive sign. So far, only a quarter of U.S. exports to China have been hit with tariffs, meaning Beijing is still holding back its full arsenal. But with key flashpoints approaching in April—China’s review of Phase One trade deal purchases, the end of the TikTok ban moratorium, and Trump’s "reciprocal tariff" threat—tensions could flare again at any moment.

The market is now betting on a tactical retreat from Trump—not a full tariff rollback, but a recalibration to avoid an all-out trade war. With both China and North America showing signs of willingness to negotiate, a breakthrough is still possible. But with Trump’s penchant for last-minute curveballs, traders aren’t taking anything for granted. The next headline could flip this market on its head in a heartbeat.

The view

Of course, part of the logic behind this sudden shift is the economic downdraft these tariffs are unleashing on U.S. stocks. The market turmoil isn’t lost on Trump, and while he thrives on brinkmanship, even he knows a collapsing S&P 500 isn’t great optics.

But let’s be real—trying to trade off Trump’s whims is a mug’s game. One moment, he’s doubling down on tariffs; the next, he’s floating an off-ramp. The only certainty is uncertainty. Markets are now pricing in a possible recalibration, but hanging your trade on Trump’s next tweet is a surefire way to get whiplashed.

Of course, we have to chase the tail risk on this one, and on the surface, it looks positive—but let’s not get ahead of ourselves. The market is reacting, not predicting, and as always with Trump, one headline can flip the entire script.

What a morning so far—more position flip-flops in the last hour than I usually make in an entire week. This is the kind of whipsaw action that eats traders alive, but if you’re nimble, there’s plenty of meat on the bone.