Trump pauses Canadian, Mexican tariffs, though uncertainty persists

President Donald Trump announced on Thursday a temporary suspension of the 25 percent tariffs he had imposed earlier this week on most goods from Canada and Mexico. This decision marks another turn in the administration’s evolving trade policy, which has caused volatility in financial markets and raised concerns about inflation and economic growth.

The exemptions, which include the United States’ two largest trading partners, are set to expire on April 2. At that point, Trump has indicated he may implement a broader tariff system based on reciprocity with all U.S. trading partners. Initially, the White House had only confirmed an exemption for Mexico, but later in the day, Trump signed an amendment extending the relief to Canada. All three nations are linked through the United States-Mexico-Canada Agreement, a trade pact that was negotiated during Trump’s first term.

In response, Canada will hold off on a planned second round of retaliatory tariffs on $87.4 billion worth of U.S. goods until April 2, according to Finance Minister Dominic LeBlanc. Canada also secured an exclusion from tariffs on potash, an essential fertilizer for American farmers, though energy products remain partially subject to tariffs due to separate 10 percent levies imposed by Trump.

According to Reuters, a White House official explained that some Canadian energy exports do not fall under the USMCA framework, which contributed to the decision to maintain duties on those products.

Trump justified the tariffs by declaring a national emergency on January 20, his first day back in office, citing the fentanyl crisis. He argued that fentanyl and its precursor chemicals, largely originating in China, are making their way to the United States via Canada and Mexico. In addition to the North American tariffs, Trump also placed a 20 percent levy on all imports from China.

China has firmly opposed the tariffs, with Foreign Minister Wang Yi emphasizing that the U.S. cannot simultaneously attempt to pressure China while expecting to maintain positive diplomatic relations. The Chinese government vowed to take countermeasures in response.

The U.S. had initially announced the tariffs in early February but delayed enforcement for Canada and Mexico until this week. However, Trump ultimately refused to grant further postponements and doubled an existing 10 percent tariff on Chinese imports.

Commerce Secretary Howard Lutnick stated that the administration hopes Canada and Mexico will make progress in addressing fentanyl-related concerns before April 2. If not, tariffs linked to that issue may remain in place.

Meanwhile, a 25 percent tariff on steel and aluminum imports is set to take effect on March 12, impacting Canada and Mexico — both major exporters of these materials to the U.S. While Trump agreed to exempt automotive goods from the tariffs, economists have warned that these measures could fuel inflation and slow economic growth. The decision to exclude autos came after meetings with executives from Ford, General Motors, and Stellantis.

Analysts warn that the ongoing tariff uncertainty is making it difficult for businesses to plan investments.

Mexico has not yet issued a formal response to the tariff delay, though President Claudia Sheinbaum confirmed she had a phone conversation with Trump on Thursday. She described the discussion as productive and emphasized the importance of maintaining cooperation while respecting national sovereignty.

Officials from both Canada and Mexico have voiced frustrations over the lack of clarity in trade negotiations with the U.S. administration. The unpredictability of Trump’s trade policies has made it challenging for businesses and governments to make informed decisions.

Supporters of Trump’s approach argue that leveraging tariffs will ultimately lead to stronger trade agreements that benefit American businesses. Some agricultural leaders, while acknowledging the short-term difficulties, believe that Trump’s tariff strategy will boost domestic production and long-term competitiveness.

Texas Agriculture Commissioner Sid Miller praised Trump’s decision to delay tariffs on agricultural products from Mexico and Canada, calling it a “win for Texas farmers and ranchers.” Miller emphasized that the state’s agricultural industry relies heavily on trade with its North American partners and that the delay provides crucial time for negotiations. “We need certainty in trade, and this move gives our producers a fighting chance to plan for the months ahead,” Miller said in a statement. However, he also warned that if the tariffs were reinstated without a favorable resolution, Texas farmers could see significant disruptions in supply chains and exports.

As the deadline approaches for a potential new wave of tariffs, businesses and policymakers across North America will be watching closely to see whether negotiations can prevent further economic disruption.