**Washington**: U.S. President Donald Trump has halted a 25% tariff on goods from Canada and Mexico initially imposed this week, leading to volatility in financial markets. The suspension is temporary, with exemptions due to expire on April 2 amid ongoing concerns regarding fentanyl trafficking and economic impacts.
U.S. President Donald Trump announced on Thursday the suspension of a 25% tariff imposed earlier in the week on most goods from Canada and Mexico, marking a notable shift in the ongoing trade policy that has created volatility in financial markets and raised concerns regarding inflation and economic growth. The exemptions for these two major U.S. trading partners are set to expire on April 2, at which point Trump has threatened to implement a global regime of reciprocal tariffs impacting all U.S. trading partners.
The tariff was initially introduced on Tuesday, and earlier in the day, Trump had indicated that Mexico would be the only country covered by an exemption. However, the subsequent amendment to the order now includes Canada as well. Both Canada and Mexico are integral partners in the North American trade agreement.
In response to the tariff suspension, Canadian Finance Minister Dominic LeBlanc announced via a post on X that the government would delay a planned second wave of retaliatory tariffs on C$125 billion (approximately $87.4 billion) worth of U.S. products until April 2, aligning with the expiration of the exemptions. The amended White House order notably excludes duties on potash, essential for U.S. farmers, though it does not lift the 10% levy already imposed on certain energy products imported from Canada.
A White House official clarified that not all energy products imported from Canada fall under the U.S.-Mexico-Canada Agreement, which Trump negotiated during his first presidential term. The tariffs were enforced following Trump declaring a national emergency due to the rising death toll from fentanyl overdoses, asserting that fentanyl and its precursor chemicals are trafficked from China through Canada and Mexico.
China responded to the tariffs by stating it would “resolutely counter” the U.S. pressure regarding the fentanyl issue, with Foreign Minister Wang Yi expressing that “no country can imagine that it can suppress China on one hand while developing good relations with China on the other hand.”
Having delayed the tariffs initially announced in February, Trump affirmed that further delays would not occur, reiterating that on April 2, reciprocal tariffs would take effect unless sufficient action was taken by Canada and Mexico to address the fentanyl situation. “Hopefully Mexico and Canada will have done a good enough job on fentanyl that this part of the conversation will be off the table,” Commerce Secretary Howard Lutnick commented in an interview with CNBC.
Trump’s administration has confirmed that tariffs on imports of steel and aluminium would proceed as planned, set to take effect on March 12. Both Canada and Mexico are significant exporters of these metals to the U.S., with Canada being a particularly vital source of aluminium.
Following the announcement, U.S. stock markets experienced a resumption of their earlier sell-off, attributed to investors’ concerns over the fluctuating tariff policies. The S&P 500 index fell by 1.8%, marking a nearly 7% decline since mid-February. Bill Sterling, a global strategist at GW&K Investment Management in Boston, noted, “A continuation of this on-again, off-again with tariffs, particularly with Mexico and Canada, is creating uncertainty in markets,” highlighting the challenges businesses face in making strategic decisions about production location amid such unpredictability.
Canadian Prime Minister Justin Trudeau, who is set to step down on Sunday, indicated that the trade tensions initiated by the United States are likely to persist. He stated, “I can confirm that we will continue to be in a trade war that was launched by the United States for the foreseeable future.” In a separate exchange, U.S. Treasury Secretary Scott Bessent referred to Trudeau in unflattering terms, describing him as a “numbskull”.
Mexican officials have not yet released a statement regarding the tariff delay. However, President Claudia Sheinbaum indicated following a phone conversation with Trump that their dialogue was productive, and collaboration had garnered unprecedented outcomes within a framework of mutual respect.
Source: Noah Wire Services
Subscribe to Industry Updates
