Trump Extends Temporary Tariff Exemption for Mexico and Canada Amid Growing Trade Uncertainty
In a dramatic shift, U.S. President Donald Trump has signed new orders that temporarily exempt a wider range of goods from his controversial tariffs on imports from Mexico and Canada.
This move, which comes just days after the tariffs were first imposed, marks the second time in as many days that the president has softened his stance on trade with two of the U.S.’s largest and most important trading partners.
This temporary relief comes as tensions surrounding the tariffs have spooked both businesses and financial markets. On Wednesday, Trump surprised many by announcing that carmakers would be temporarily spared from the steep 25% import levies—a significant reversal just one day after the tariffs were rolled out.
Mexican President Claudia Sheinbaum expressed gratitude for Trump’s decision, while Canada’s Finance Minister, Chrystia Freeland, signaled that Canada would hold off on its planned retaliatory tariffs against U.S. products.
However, despite the temporary pause, the trade war is far from over, as Canadian Prime Minister Justin Trudeau admitted on Thursday that a “colourful” phone call with Trump had taken place, revealing deep frustrations on both sides.
According to Reports from both U.S. and Canadian media indicated that Trump used profane language during the conversation, highlighting the tension between the allies.
Despite some relief, Trudeau remains resolute: “Our goal remains to get these tariffs removed entirely,” he said. “We’re not backing down.”
In contrast, Sheinbaum described her call with Trump as “excellent and respectful.” The Mexican leader emphasized the importance of cooperation between the two nations, especially in addressing the flow of opioids like fentanyl from Mexico into the U.S. and the illegal trafficking of firearms across the border.
The newly signed orders carve out exceptions for goods shipped under the U.S.-Mexico-Canada Agreement (USMCA), which replaced the North American Free Trade Agreement (NAFTA).
This includes everyday products like televisions, air conditioners, avocados, and beef. Additionally, Trump has eased tariffs on potash—an essential fertilizer for U.S. farmers—reducing the tax from 25% to 10%.
However, a White House official confirmed that approximately 50% of U.S. imports from Mexico and 62% from Canada will still be subject to tariffs, though these figures may shift as companies adjust their business strategies in response to the changes.
Looking ahead, the Trump administration is set to unveil further tariffs on April 2, promising “reciprocal” duties tailored to countries around the world.
The ongoing trade war has already sent shockwaves through global markets, with the S&P 500 index sliding nearly 1.8% on Thursday as investors grapple with the uncertainty.
George Godber, a fund manager at Polar Capital, warned that the erratic shifts in U.S. tariff policy have made it difficult for businesses to plan effectively. “It’s like a ‘hokey cokey’ with these tariffs—impossible for companies to manage their production lines. It’s definitely putting pressure on the U.S. economy,” he said.
On the other hand, European markets, particularly in Germany, have seen a more positive response as they look to capitalize on the instability.
Despite the market turbulence, Trump brushed off suggestions that his changes were driven by stock market concerns. “It’s got nothing to do with the market,” he said confidently. “I’m not even looking at the market. Long-term, the United States is going to be stronger than ever with what we’re doing.”
As the trade standoff continues to evolve, one thing is clear: the situation remains volatile, and the path to resolution is uncertain. With crucial decisions looming, the world is watching closely to see how this economic chess game will unfold.
