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(Bloomberg) -- Oil fell after President Donald Trump’s pick for commerce secretary suggested tariffs on Canada and Mexico aren’t a done deal.

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West Texas Intermediate slid 1.6% to settle below $73 a barrel after Howard Lutnick said that the US’s two biggest trading partners can avoid new levies if they take action on illegal migration and fentanyl flows. Expectations that the tariffs will go into effect this weekend had earlier spurred a rally in oil futures and briefly pushed the discount for Canadian crude to the widest in six months, before narrowing after Lutnick’s remarks.

“Crude prices keep dancing to the rhythm of Trump’s tariff orchestra, with Canada tariffs in focus as they go into effect on Saturday,” said Ole Hansen, head of commodities strategy at Saxo Bank. Wednesday’s price decline represents “a sour sentiment across an overall rangebound market,” he added.

Crude started 2025 higher as US sanctions against Russia lifted prices, but trade-war concerns and poor economic data from China have largely erased the year’s gains.

The rollout of Trump’s policy agenda has the potential to roil markets further, with the US president calling on OPEC+ to help lower crude prices. The producer cartel is set to discuss Trump’s plans to increase US oil production at its next meeting on Feb. 3, Tass reported, citing Kazakhstan’s Energy Minister Almassadam Satkaliyev.

Traders also digested a more hawkish-than-anticipated decision by the Federal Reserve to hold rates steady, dimming the outlook for oil demand.

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--With assistance from Christopher Charleston.

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