US President Donald Trump on Thursday temporarily paused steep tariffs on Canadian and Mexican imports, easing trade tensions and providing relief to businesses and consumers following a market downturn.
The move, announced through executive orders, delays tariffs of up to 25% on the two US neighbours, which had been imposed earlier in the week under the North American trade agreement.
The suspension, effective until April 2, follows a similar reprieve granted to the automotive sector a day earlier. Trump had approved a one-month exemption for vehicles transported under the United States-Mexico-Canada Agreement (USMCA) after discussions with US auto giants Stellantis, Ford, and General Motors.
However, the White House indicated that tariffs would still affect significant portions of Canadian and Mexican exports. A spokesperson stated that approximately 62% of Canadian imports would remain subject to new duties, primarily energy imports at a reduced rate of 10%. Meanwhile, nearly half of Mexican imports fall under the USMCA and will be exempt from additional levies.
Trump defends tariffs, targets Canada
Despite concerns from economists that the tariffs could slow US economic growth and drive up inflation, Trump dismissed suggestions that market volatility influenced his decision. He reiterated his stance on trade protectionism, signalling further measures to come.
“Those are happening next week, and the big one will be on April 2nd when reciprocal tariffs [are introduced],” Trump said. “Canada is a high-tariff nation. Canada charges us 250% for our milk products and other products and a tremendous tariff on lumber and things as such. We don’t need their lumber. We have more lumber than they do. We don’t need Canada’s lumber. We don’t need cars from Canada. We don’t need energy from Canada. We don’t need anything from Canada… We can be self-sustaining, which is in most things… I’m going to be freeing that up very shortly so that we don’t have to go to other countries to buy lumber.”
He suggested that future executive actions would focus on expanding domestic resource use to reduce reliance on Canadian imports.
Mexico secures trade relief
In contrast, Trump acknowledged a more cooperative trade relationship with Mexico. Following discussions with Mexican President Claudia Sheinbaum, he announced that Mexico would not be subject to tariffs on goods covered under USMCA.
“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!”
The trade dispute comes as US government data showed a record trade deficit in January, rising 34% to $131.4 billion. Analysts attribute the increase in part to gold imports, as well as businesses stockpiling goods ahead of potential future tariffs.
Canada vows to fight tariffs
Despite temporary relief for some industries, Canadian Prime Minister Justin Trudeau stated that Ottawa would continue challenging US trade measures.
“Our goal remains to get these tariffs, all tariffs removed,” Trudeau said, adding that Canada would maintain its dispute with Washington “for the foreseeable future.”
Meanwhile, Canadian and US government data indicates that Canada accounts for less than one percent of illicit fentanyl in the US supply. China has also rejected US accusations regarding its role in fentanyl trafficking, arguing that it is a domestic issue that tariffs cannot resolve.
Trump has long defended tariffs as a tool to generate government revenue and address trade imbalances. With new duties set to take effect in the coming weeks, uncertainty remains over how the latest measures will impact North American trade relations.
