US tariffs on Mexican goods under the US-Mexico-Canada Agreement (USMCA) have been temporarily suspended until April 2, President Donald Trump announced. The decision marks a second policy shift in two days as the White House navigates growing trade tensions.
Temporary Tariff Relief for Mexico
Trump confirmed that after discussions with Mexican President Claudia Sheinbaum, he agreed to halt tariffs on all products covered under the USMCA. While there has been no official statement on Canada’s status, a Canadian government source suggested a similar exemption is expected.
The move follows Trump’s decision on Wednesday to delay 25% import taxes on carmakers, a policy that had taken effect just a day earlier. US Commerce Secretary Howard Lutnick hinted that the exemption could extend beyond auto parts to all USMCA-covered goods.
Tariff Debate and Economic Concerns
The USMCA, implemented in 2020, governs trade between the US, Mexico, and Canada, covering key industries like automobiles, dairy, and lumber. Billions of dollars in goods move between these nations daily, making tariffs a sensitive issue.
Trump argues that tariffs will protect American industries and bring back manufacturing jobs. However, many economists warn they could drive up consumer prices and hurt businesses that rely on international supply chains.
Tariffs are paid by the importing business, which often passes the costs to consumers. This has fueled concerns among US companies, particularly those with deep supply chain ties to Mexico and Canada.
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Canada’s Expected Exemption and Political Tensions
However, Ontario Premier Doug Ford announced a 25% tariff on electricity supplied to US states like New York, Michigan, and Minnesota starting Monday.
Meanwhile, Sheinbaum described her discussion with Trump as “excellent and respectful,” stating that both nations will collaborate on tackling fentanyl trafficking into the US and illegal gun sales to Mexico.
Trade War Impact and Market Reactions
The introduction of tariffs has fueled trade conflicts between the US, its neighbors, and China. Both Mexico and Canada retaliated by imposing their own import levies, escalating tensions further.
Earlier on Thursday, the US Commerce Department reported a 34% spike in the trade deficit, exceeding $130 billion in January. Businesses rushed to import goods before higher tariffs took effect, leading to a 10% surge in imports that month.
The suspension of Mexico’s tariffs offers temporary relief, but uncertainty remains. With trade policies shifting rapidly, businesses and policymakers are closely watching whether exemptions will extend beyond April or if tensions will flare up again.
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