U.S. President Donald Trump on Thursday announced a one-month delay on 25% tariffs for many Mexican goods and some imports from Canada, in another twist to the rapidly changing trade policy that has unsettled financial markets and business leaders.
The exemption, which will expire on April 2, covers both of the two largest U.S. trading partners. Trump had earlier only mentioned an exemption for Mexico, but the amendment he signed to his order for 25% levies on imports from both – which went into effect on Tuesday – covers Canada as well.
For Canada, the amended order also excludes duties on potash, a critical fertilizer for U.S. farmers, but does not fully cover energy products, on which Trump has imposed a separate 10% levy.
A White House official said that is because not all energy products imported from Canada are covered under the U.S.-Mexico-Canada Agreement (USMCA) on trade that Trump negotiated in his first term as president.
Trump imposed the tariffs after declaring a national emergency due to deaths from fentanyl overdoses, asserting that the deadly opioid and its precursor chemicals make their way from China to the U.S. via Canada and Mexico. Trump has also imposed tariffs of 20% on all imports from China as a result.
In addition to his claims about fentanyl, Trump has insisted that the tariffs could be resolved by fixing the trade deficit and he emphasized while speaking in the Oval Office that he still plans to impose a global regime of "reciprocal" duties on all U.S. trading partners starting on April 2.
"Most of the tariffs go on April the second," Trump said before signing the orders. "And then we have some temporary ones and small ones, relatively small, although it's a lot of money having to do with Mexico and Canada."
The development comes a day after Trump exempted automotive goods from the 25% tariffs, levies that economists saw as threatening to stoke inflation and stall growth across all three economies.
The announcement came after Trump spoke Wednesday with leaders of Ford, General Motors and Stellantis, the parent company of Chrysler and Jeep. His press secretary said Trump told the chief executives to move auto production to the U.S. to avoid tariffs.
On Thursday, Trump said he was not looking to extend the exemption for autos for another month.
Trump's on-again, off-again tariffs threats have roiled financial markets, lowered consumer confidence, and enveloped many businesses in an uncertain atmosphere that could delay hiring and investment.
U.S. stock markets resumed their recent sell-off on Thursday, with investors citing the rapid-fire, back-and-forth developments on tariffs as a concern due to the uncertainty they are fanning. The S&P 500 stock index has fallen below where it was before Trump was elected.
Asked whether the stock market decline was due to his tariffs, Trump said: "I think it's globalists who see how rich our country is going to be and they don't like it. It's a big market out there."
"But again they've been ripping off this country for years, and they're going to do great, but we can't let this continue to happen to Americans any more. Otherwise we're not going to have a country any more," he said.
Trump also claimed that he's "not even looking at the market," even though he has in the past asked about how the stock market is responding in front of the reporters covering him.
Economists have warned that the levies may rekindle inflation that has already proven difficult to bring fully to heel, and slow demand and growth in its wake.
Roughly 62% of imports from Canada would likely still face the new tariffs because they're not USMCA compliant, according to a White House official who insisted on anonymity to preview the orders on a call with reporters.
Half of imports from Mexico that are not USCMA compliant would also be taxed under the orders signed by Trump, the official said.
Mexico President Claudia Sheinbaum has planned to announce any retaliatory measures on Sunday, but Trump credited her with making progress on illegal immigration and drug smuggling as a reason for again pausing tariffs that were initially supposed to go into full effect in February.
"I did this as an accommodation, and out of respect for, President Sheinbaum," Trump said on Truth Social. "Our relationship has been a very good one, and we are working hard, together, on the Border."
Sheinbaum said she and Trump "had an excellent and respectful call in which we agreed that our work and collaboration have yielded unprecedented results," on a post on the social media platform X.
Mexico has cracked down on cartels, sent troops to the U.S. border and delivered 29 top cartel bosses long chased by American authorities to the Trump administration in a span of weeks.
At a press conference, Sheinbaum elaborated on her call with Trump on Thursday, saying that she told the president that Mexico was making great strides in fulfilling his security demands.
"I told him we're getting results," Sheinbaum said. But the U.S. imposed the tariffs, so she asked Trump "how are we going to continue cooperating, collaborating with something that hurts the people of Mexico?"
She added that "practically all of the trade" between the U.S. and Mexico will be exempt from tariffs until April 2.
She said the two countries will continue to work together on migration and security, and to cut back on fentanyl trafficking to the U.S.
From January to February, the amount of fentanyl seized at the border dropped more than 41%, according to Sheinbaum, citing data from U.S. Customs and Border Protection. She cited the dip as meeting a commitment made to Trump.
Canadian Prime Minister Justin Trudeau said earlier Thursday that he expects Canada and the U.S. to be in a trade war for the foreseeable future after having what he called a colorful but constructive call with Trump on Tuesday.
Later on Thursday, a senior Canadian government official said Canada's response tariffs would remain for now despite Trump's postponement. The official spoke on condition of anonymity as they were not authorized to speak publicly about the matter.
Canada's initial $30 billion Canadian (US$21 billion) worth of retaliatory tariffs have been applied on items like American orange juice, peanut butter, coffee, appliances, footwear, cosmetics, motorcycles and certain pulp and paper products.
Ontario Premier Doug Ford, the leader of Canada's most populous province, also said Thursday that, starting on Monday, the province will charge 25% more for electricity shipped to 1.5 million Americans in response to Trump's tariff plan. Ontario provides electricity to Minnesota, New York and Michigan.
Ford said Ontario's tariff would remain in place despite the one-month reprieve from the Americans. Ford said Wednesday that so long as the threat of tariffs continue, Ontario's position would remain the same.
"This whole thing with President Trump is a mess," Ford said. "This reprieve, we've went down this road before. He still threatens the tariffs on April 2."
British Columbia Premier David Eby also said his province will introduce legislation in the coming days that would give it the ability to levy fees on commercial trucks traveling from the United States through the province to Alaska. He said Canadians won't let up until the tariffs are taken off the table.
"Yet again the president is sowing uncertainty and chaos attempting to undermining our economy by implementing tariffs and then pulling them off," Eby said.
"We are going to ensure that the Americans understand how pissed off we are."
Ottawa plans a further $125 billion (US$87 billion) in tariffs in three weeks on American products like electric vehicles, fruits and vegetables, diary, beef, pork, electronics, steel and trucks.
Despite Trump's claim that the U.S doesn't need Canada, nearly a quarter of the oil America consumes per day comes from Canada. About 60% of U.S. crude oil imports are from Canada, and 85% of U.S. electricity imports as well.
Canada is also the largest foreign supplier of steel, aluminum and uranium to the U.S. and has 34 critical minerals and metals that the Pentagon is eager for and investing for national security.
Canada is the top export destination for 36 U.S. states. Nearly $3.6 billion Canadian (US$2.7 billion) worth of goods and services cross the border each day.
In his speech to a joint session of Congress Tuesday night, Trump portrayed tariffs as a source of increasing wealth and power for the United States.
Yet most economists expect the import duties to send prices higher, slow the economy, and potentially cost jobs.
The Yale University Budget Lab has estimated that the tariffs on Canada, China, and Mexico would increase inflation by a full percentage point, cut growth by half a percentage point and cost the average household about $1,600 in disposable income.
Trump appeared to acknowledge Tuesday night that there could be some pain: "There'll be a little disturbance, but we're okay with that. It won't be much."
