US President Donald Trump has signed executive actions that delay for nearly one month tariffs on all products from Mexico and Canada that are covered by the USMCA free trade treaty, a significant walkback of the administration’s signature economic plan that has rattled markets, businesses and consumers.
The executive actions follow a discussion Trump held on Thursday with Mexican President Claudia Sheinbaum and negotiations between Canadian and Trump administration officials.
“After speaking with President Claudia Sheinbaum of Mexico, I have agreed that Mexico will not be required to pay Tariffs on anything that falls under the USMCA Agreement,” Trump wrote on Truth Social on Thursday, after a phone conversation with the Mexican President.
He said the tariffs would be delayed until April 2.
The USMCA is the United States-Mexico-Canada Agreement, negotiated by Trump during his first term, that makes the three North American countries a free trade zone.
“I did this as an accommodation, and out of respect for, President Sheinbaum. Our relationship has been a very good one, and we are working hard, together, on the Border, both in terms of stopping Illegal Aliens from entering the United States and, likewise, stopping Fentanyl,” Trump added.
“Thank you to President Sheinbaum for your hard work and cooperation!”
Sheinbaum, in a post on X, thanked US President Donald Trump for a “respectful” discussion about the tariffs he imposed.
Sheinbaum said that “virtually all” of Mexico’s trade with the United States is included in the US-Mexico-Canada Agreement.
“Practically all the trade we have with the United States is within the Mexico, United States, Canada Agreement. There is a part that has to do with rules of origin, but everything is practically within the trade agreement,” Sheinbaum said at a news conference on Thursday.
However, a White House official on a call with the press added some nuance to that argument: About 50 per cent of imports from Mexico and 36 per cent of imports from Canada are covered under the agreement, the official said, but many more items – such as avocados – are generally not covered because of the high cost of compliance. However, those items that technically are not in compliance with USMCA have in effect been treated at customs as if they were, or they weren’t subject to tariffs.
It’s complicated trade policy, and the White House official suggested those goods producers could register to comply with USMCA rules to avoid the 25 per cent tariff for a month.
But the official referred the press to the US Trade Representative for more details about which products will maintain the 25 per cent tariff and which won’t once those details become available.
Included in the USMCA-compliant goods are autos, which Trump announced on Wednesday would be subject to a one-month reprieve from the tariffs. The administration said the delay would give automakers time to move more production to the United States to avoid tariffs, which are now set to go into effect next month. But that is almost certain not to happen, because that would mark a significant undertaking, requiring massive hiring, investment and strategic planning.
Energy from Canada, however, is not included in the USMCA, the White House official said. So that lower 10 per cent tariff is expected to remain in place, boosting gas prices in the Northeast United States. But the Trump administration temporarily on Thursday reduced the tariff on Canadian potash to 10 per cent (from the 25 per cent tariff imposed on Tuesday) to give farmers a bit of a break.
Trump has frequently praised Sheinbaum, and on Thursday she said she informed him that there was a dramatic reduction in the amount of fentanyl seized at the US border with Mexico in February from January, crediting increased border controls between the two countries. Sheinbaum also said on Thursday that, with the pause in effect, she will not announce previously planned retaliatory measures against the US tariffs.
However, Trump has sharply criticised Canadian Prime Minister Justin Trudeau, whom he accused of trying to capitalise politically on the tariff angst Canadians have felt. It was notable that Trump initially announced a reprieve for Mexico but not Canada, although he eventually granted one for Canada, too.
“Believe it or not, despite the terrible job he’s done for Canada, I think that Justin Trudeau is using the Tariff problem, which he has largely caused, in order to run again for Prime Minister,” Trump wrote in a Truth Social post.
“So much fun to watch!”
Trudeau has been equally and publicly critical of Trump, and he said in a press conference on Thursday that he expects Canada and the US to be in a trade war for the foreseeable future.
And Trudeau said that all his country’s retaliatory measures would remain in place unless the United States completely rolls back its tariffs, not just temporarily.
Ontario Premier Doug Ford told CNN on Thursday his province is implementing a 25 per cent tariff on electricity exports to 1.5 million Americans’ homes in Minnesota, Michigan and New York next week.
The back and forth on tariffs alone is causing confusion. Trump has routinely threatened or briefly put in place tariffs only to announce delays or pauses, leaving Corporate America unclear on how to invest and whether to hire.
Trump campaigned on steep tariffs on Day One. Instead, he signed several executive actions on his first day in office ordering his administration to investigate whether to pursue tariffs on a wide range of goods. In a signing ceremony, Trump announced that 25 per cent tariffs on Canada and Mexico would be coming February 1.
But those tariffs were delayed — first by a few days and then by a month after both countries sent delegations to negotiate on illegal border crossings and fentanyl.
Earlier on Thursday, US Commerce Secretary Howard Lutnick told CNBC that more one-month tariff exemptions under USMCA are “likely”.
“It’s likely that it will cover all USMCA compliant goods and services, so that which is part of President Trump’s deal with Canada and Mexico are likely to get an exemption from these tariffs,” Lutnick said.
Trump’s latest announcement on Mexico tariffs came one day after White House Press Secretary Karoline Leavitt said that the President is granting a one-month exemption to three major automakers from the newly imposed 25 per cent tariffs on Mexico and Canada.
The United States-Mexico-Canada Agreement (USMCA) is a trade agreement negotiated, signed, and ultimately enacted during Trump’s first term, aimed at replacing the former North American Free Trade Agreement (NAFTA).
On February 1, Trump signed an executive order imposing a 25 per cent tariff on products imported from Mexico and Canada, with a 10 per cent tariff increase on Canadian energy products. On February 3, Trump announced a 30-day delay in implementing the tariffs on both countries and continued negotiations. According to this decision, the relevant tariff measures took effect on March 4.
Canada has announced retaliatory measures, while Mexico has signaled its intent to implement tariffs and other economic countermeasures. Businesses are increasingly concerned about the rising costs due to these tariffs, which could drive up consumer prices and contribute to an economic slowdown.
The stock market has shown significant volatility in response to the new tariffs, with investor uncertainty mounting as fears of potential economic repercussions grow.
The escalating tensions and economic uncertainties might have prompted Trump to reassess his trade policies.
Trump has yet to make announcement on an overall pause on Canada tariffs. In a post on Truth Social on Thursday, he accused Canadian Prime Minister Justin Trudeau of using the tariff problem to further his re-election bid.
Trudeau, meanwhile, said on Thursday that Canada will continue to be in a trade war with the United States for the foreseeable future.
