On Thursday, United States President Donald Trump paused tariffs on several imports from Mexico and Canada for one month. Earlier, he had imposed 25 percent tariffs on nearly all imports from both countries.
The decision to halt tariffs for Mexico came after a phone call with Mexican President Claudia Sheinbaum. Later, Trump extended the reprieve to Canada.
Here’s a breakdown of what happened, which products are affected, and what happens next:
What happened?
On Thursday, Trump signed orders temporarily exempting goods from Mexico and Canada covered by the US-Mexico-Canada Agreement (USMCA) from the 25 percent tariffs. The suspension will take effect at 17:01 GMT on Friday.
These tariffs had been implemented on Tuesday, one month after Trump initially announced 25 percent tariffs on all imports from Mexico and Canada, along with an additional 10 percent tariffs on Chinese imports in February. Originally set to take effect on February 4, the tariffs were postponed by a month following negotiations with Sheinbaum and Canadian Prime Minister Justin Trudeau.
On Wednesday, Trump temporarily exempted car manufacturers from the 25 percent tariffs for a month.
The tariff pause announced on Thursday will remain in effect until April 2. Trump has threatened to impose a global system of reciprocal tariffs on all US trading partners after that date, where each country will face the same tariff rates it imposes on US goods.
However, before April 2, Trump is still set to impose a 25 percent tariff on steel and aluminum imports on March 12. Canada and Mexico are major exporters of these products to the US, with Canada being the largest supplier of aluminum to the US.
What’s behind Trump’s tariff pause?
In a post on Truth Social, Trump wrote: “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. This Agreement is until April 2nd.”
Trump added that he made this decision “out of respect” for Sheinbaum, noting that the US and Mexico have a strong relationship and are collaborating to address undocumented migration and the flow of fentanyl into the US.
He later extended the exemption to Canadian exports covered by the USMCA.
What is the USMCA?
USMCA stands for the United States-Mexico-Canada Agreement, a free-trade agreement negotiated during Trump’s first term.
Signed in 2018, it took effect on July 1, 2020, replacing the 1994 North American Free Trade Agreement (NAFTA). The USMCA is subject to review every six years.
How much relief does Mexico get?
While specific exempt products remain unclear, the overall benefit to Mexican exports is significant.
In 2024, Mexico’s total exports to the US were valued at approximately $505.8 billion. According to US Census Bureau data, $249.7 billion of these exports fell under the USMCA.
This means Trump’s pause applies to about 49 percent of Mexico’s exports to the US.
How much relief does Canada get?
In 2024, Canada’s exports to the US were worth about $412.7 billion, with $156.9 billion falling under the USMCA.
Thus, Trump’s pause applies to 38 percent of Canada’s exports to the US.
Nearly all agricultural products traded between the US and Canada are covered by the USMCA. Additionally, the pause extends to potash, a fertilizer.
Energy products, however, are not fully covered, as Trump has imposed a separate 10 percent tariff on them. Canada is the largest source of US oil imports.
How have Mexico and Canada responded?
Mexican President Sheinbaum posted on X (formerly Twitter) on Thursday: “We had an excellent and respectful call in which we agreed that our work and collaboration have yielded unprecedented results, within the framework of respect for our sovereignties.”
Mexico had initially planned to announce retaliatory tariffs on Sunday at a public event in Zocalo, the heart of Mexico City. However, the event is now expected to celebrate the tariff pause instead.
When Trump first announced the tariffs, Canada imposed retaliatory tariffs worth $30 billion Canadian dollars ($21 billion) on US products, including orange juice, peanut butter, cosmetics, footwear, and paper products. Two Canadian officials, speaking anonymously to The Associated Press, confirmed these tariffs will remain in place.
Canada has delayed its second wave of retaliatory tariffs on $125 billion Canadian dollars’ ($87.3 billion) worth of US imports until April 2, as stated by Canadian Finance Minister Dominic LeBlanc in an X post.
Doug Ford, Premier of Canada’s Ontario province, also emphasized that the 25 percent tariffs on Ontario’s electricity, which supplies 1.5 million Americans in Minnesota, New York, and Michigan, will remain. “A pause on some tariffs means nothing. Until President Trump removes the threat of tariffs for good, we will be relentless,” Ford wrote on X.
Canadian Prime Minister Justin Trudeau, who is stepping down after his Liberal Party’s leadership election on Sunday, told reporters he foresees a trade war between the US and Canada in the near future after a call with Trump on Wednesday. “It was a colourful call. It was also a very substantive call,” Trudeau said.
Shortly after, US Treasury Secretary Scott Bessent remarked during an event in New York: “If you want to be a numbskull like Justin Trudeau and say ‘Oh, we’re going to do this,’ then tariffs are going to go up.”
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