On Thursday, President Donald Trump announced the suspension of the 25% tariffs he had imposed earlier this week on most goods imported from Canada and Mexico.
This decision marks the latest development in a turbulent trade policy that has repeatedly unsettled financial markets and intensified concerns about rising inflation and a potential economic slowdown.
These exemptions, which pertain to the United States’ two largest trading partners, are set to expire on April 2. By that date, President Trump has signaled his intention to enforce a global regime of reciprocal tariffs impacting all U.S. trading partners. Initially, Trump had enforced a 25% levy on imports from Canada and Mexico on Tuesday, initially mentioning an exemption only for Mexico earlier on Thursday. However, an amendment he signed later that afternoon extended this exemption to include Canada as well. Notably, these three nations are interlinked through their participation in a North American trade pact.
In reaction, Canada has decided to postpone a planned second wave of retaliatory tariffs targeting C$125 billion worth of U.S. products until April 2, as confirmed by Finance Minister Dominic LeBlanc in a message on X.
In the case of Canada, the revised directive from the White House notably exempts duties on potash, a pivotal ingredient in fertilizers critical for American farmers. However, the adjustment falls short in addressing the full spectrum of energy products, which continue to be subject to a distinct 10% tariff imposed by Trump. A White House official explained this discrepancy stems from not all Canadian energy imports being included in the U.S.-Mexico-Canada Agreement on trade, a deal orchestrated by Trump during his first term as president.
Trump executed these tariffs in response to a national emergency declared on January 20, his initial day as president, citing fatalities from fentanyl overdoses. He argued that this lethal opioid and its precursor chemicals traverse from China to the United States via Canada and Mexico. Additionally, Trump implemented a 20% tariff on all Chinese imports as a consequence.
The levies were initially unveiled by Trump at the start of February, but their enforcement was postponed for Canada and Mexico until Tuesday. Earlier this week, he opted not to further delay and instead intensified a 10% tariff that has been active since February 4 on imports from China.
On April 2, we’re poised to enforce reciprocal tariffs, with hopes that Mexico and Canada will have effectively addressed the fentanyl issue to remove it from the negotiation table, thereby allowing us to focus solely on reciprocal tariffs,” Commerce Secretary Howard Lutnick expressed to CNBC. “However, if the matter remains unresolved, these tariffs will persist.”
Moreover, Trump affirmed that 25% tariffs on steel and aluminum imports are set to commence as planned on March 12. Canada and Mexico rank among the leading exporters of these metals to U.S. markets, with Canada notably accounting for the majority of aluminum imports.