US President Donald Trump on Thursday temporarily lifted steep tariffs targeting Canada and Mexico, easing trade tensions and providing relief to businesses and consumers after market backlash.
Trump signed executive orders to delay new tariffs on Canadian and Mexican imports covered under the North American trade agreement.
The implementation of tariffs of up to 25% on both US neighbors on Tuesday led to market declines, with economists warning that such broad levies could slow America’s economic growth and drive up inflation. However, he dismissed claims that the decision was influenced by market volatility.
The suspension, effective until April 2, followed a day after similar relief was granted to the automotive sector.
Following discussions with US automotive giants Stellantis, Ford and General Motors, Trump approved a one-month exemption for vehicles transported through the United States-Mexico-Canada Agreement (USMCA).
A White House representative indicated that approximately 62 percent of Canadian imports would remain subject to new tariffs, primarily energy imports at a reduced rate of 10 percent.
Approximately half of Mexican imports fall under the USMCA. On Thursday, Trump stated that the latest adjustments create “much more favorable for our American car manufacturers.”
He indicated that significant measures would be revealed on April 2, when he plans to implement “reciprocal tariffs” to address practices deemed unfair by Washington. Canadian and Mexican goods might still face duties at that time.
The US president confirmed he would maintain broad tariffs on steel and aluminium, scheduled for implementation the following week.
Trump reported having a “very good conversation” with Mexican President Claudia Sheinbaum during a Thursday Oval Office briefing.
“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 posted on Truth Social. “
“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. Thank you to President Sheinbaum for your hard work and cooperation!” he added.
Canadian Prime Minister Justin Trudeau stated Thursday that Ottawa would continue its trade dispute with Washington for “the foreseeable future” despite “breaks for certain sectors.”
“Our goal remains to get these tariffs, all tariffs removed,” Trudeau added.
Canadian and US government data shows Canada accounts for less than one percent of illicit fentanyl in US supply. Meanwhile, China has rejected US accusations regarding its role in the fentanyl supply chain, arguing that it is a domestic issue that tariffs cannot resolve.
Trump has characterised tariffs as government revenue sources and solutions for trade imbalances and unfair practices.
US government data released Thursday showed the US trade deficit reached a new record in January. The overall trade gap of the world’s largest economy increased 34 percent to $131.4 billion, driven by higher monthly imports.
Analysts attribute the US deficit partly to gold imports, whilst noting that data indicates businesses increased imports to avoid future tariffs.