President Donald Trump on Thursday exempted goods from both Canada and Mexico under a North American trade pact for a month from the 25% tariffs that he had imposed earlier this week, the latest twist in fast-shifting trade policy that has whipsawed 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 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.
The exemptions will expire on April 2, when Trump has threatened to impose a global regime of reciprocal tariffs on all U.S. trading partners.
The development comes a day after Trump exempted automotive goods from the 25% tariffs he imposed on imports from Canada and Mexico as of Tuesday, levies that economists saw as threatening to stoke inflation and stall growth across all three economies.
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. 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.
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Trump Exempts Mexico Goods From Tariffs for a Month, But Doesn’t Mention Canada
Original story below was posted from Reuters on March 06, 2025, 11:24 a.m.
U.S. President Donald Trump on Thursday said Mexico won’t be required to pay tariffs on any goods that fall under the United States-Mexico-Canada Agreement on trade until April 2, but made no mention of a reprieve for Canada despite his Commerce secretary saying a comparable exemption was likely.
“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. “This Agreement is until April 2nd.”
Earlier on Thursday, U.S. Commerce Secretary Howard Lutnick said the one-month reprieve on hefty tariffs on goods imported from Mexico and Canada that has been granted to automotive products is likely to be extended to all products that comply with the U.S.-Mexico-Canada Agreement on trade.
Lutnick told CNBC he expected Trump to announce that extension on Thursday, a day after exempting automotive goods from the 25% tariffs he slapped on imports from Canada and Mexico earlier in the week.
Trump “is going to decide this today,” Lutnick said, adding “it’s likely that it will cover all USMCA-compliant goods and services.”
“So if you think about it this way, if you lived under Donald Trump’s US-Mexico-Canada agreement, you will get a reprieve from these tariffs now. If you chose to go outside of that, you did so at your own risk, and today is when that reckoning comes,” he said.
Nonetheless, Trump’s social media post made no mention of a reprieve for Canada, the other party to the USMCA deal that Trump negotiated during his first term as president.
Lutnick said his “off the cuff” estimate was that more than 50% of the goods imported from the two U.S. neighbors - also its largest two trading partners - were compliant with the USMCA deal that Trump negotiated during his first term as president.
Canadian Prime Minister Justin Trudeau called Lutnick’s comments “promising” in remarks to reporters in Canada.
“That aligns with some of the conversations that we have been having with administration officials, but I’m going to wait for an official agreement to talk about Canadian response and look at the details of it,” Trudeau said. “But it is a promising sign. But I will highlight that it means that the tariffs remain in place, and therefore our response will remain in place.”
Lutnick emphasized that the reprieve would only last until April 2, when he said the administration plans to move ahead with reciprocal tariffs under which the U.S. will impose levies that match those imposed by trading partners.
In the meantime, he said, the current hiatus is about getting fentanyl deaths down, which is the initial justification Trump used for the tariffs on Mexico and Canada and levies on Chinese goods that have now risen to 20%.
“On April 2, we’re going to move with the reciprocal tariffs, and hopefully Mexico and Canada will have done a good enough job on fentanyl that this part of the conversation will be off the table, and we’ll move just to the reciprocal tariff conversation,” Lutnick said. “But if they haven’t, this will stay on.”
Indeed, Trudeau is expecting the U.S. and Canada to remain in a trade war.
“I can confirm that we will continue to be in a trade war that was launched by the United States for the foreseeable future,” he told reporters in Ottawa.
(Reporting By Katharine Jackson in Washington, Dan Burns in New York, and David Ljunggren in Ottawa; Editing by Chizu Nomiyama and Alistair Bell)
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