Washington: The Trump administration may soon introduce exemptions to the 25% tariffs imposed on imports from Canada and Mexico, Commerce Secretary Howard Lutnick indicated Wednesday, marking a potential retreat from the hardline trade measures announced a day earlier.

In an interview with Bloomberg Television, Lutnick said President Donald Trump would update his tariff plans in an afternoon announcement, possibly sparing sectors such as automobiles from the import taxes.

The shift comes after Tuesday’s tariff hikes rattled the stock market, raised consumer concerns and triggered retaliatory measures from Canada and China. Mexico is expected to announce its response on Sunday.

On Tuesday, Trump imposed 25% tariffs on imports from Canada and Mexico, while taxing Canadian energy products, including oil and electricity, at a lower 10% rate. The administration also doubled the tariff on Chinese imports from 10% to 20%. Officials have framed the move as a crackdown on drug smuggling, particularly fentanyl, but Trump also linked it to reducing the U.S. trade deficit.

The market turmoil following the announcement, coupled with fears of rising costs for consumers already burdened by inflation, may have led to the administration reconsidering aspects of the tariff policy.

“I think he’s going to figure out, you do more, and I’ll meet you in the middle in some way,” Lutnick told Fox Business Network on Tuesday, remarks that helped the stock market pare its losses.

However, during his joint address to Congress on Tuesday night, Trump appeared firm on continuing the tariffs and touted a plan for a “reciprocal” tax starting in April to match tariffs, taxes and subsidies imposed by other nations.

The president downplayed economic concerns, calling the potential fallout “a little disturbance” and dismissing economic forecasts predicting higher inflation and slower growth.

“It may be a little bit of an adjustment period,” he said, adding that farmers would ultimately benefit from reciprocal tariffs imposed on countries that tax U.S. exports. “You have to bear with me again and this will be even better.”

(With inputs from AP)