On Again, Off Again: Donald Trump Delays Some Tariffs on Mexico, Canada for One Month- wna24

New Delhi: US President Donald Trump on Thursday signed executive orders to delay some tariffs imposed against Mexico and Canada till April 2. This delay on tariffs by the US President is covered by the USMCA (United States-Mexico-Canada Agreement) for nearly a month, signaling a significant shift from his earlier stance and offering temporary relief to businesses and markets rattled by trade uncertainty.

These move comes after Trump, during his first address to the US Congress , asserted he is “not backing down on tariffs” against both countries. “Tariffs are about making America rich again and making America great again. And it’s happening, and it will happen rather quickly. There’ll be a little disturbance, but we’re OK with that. It won’t be much,” he stated.

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Trump announced the delay after a phone call with Mexican President Claudia Sheinbaum, stating that Mexico would not be required to pay tariffs on goods covered by the USMCA. He emphasised that the delay was a sign of respect for Sheinbaum and their ongoing cooperation, particularly concerning border security and efforts to curb fentanyl trafficking.

Initially, Trump did not mention Canada in the tariff reprieve, which caused further confusion in the market. However, later announcements revealed that Canada would also benefit from a delay. Canadian officials, led by Finance Minister Dominic LeBlanc, confirmed that their planned tariffs on over $125 billion worth of US goods would also be paused until April 2.

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The tariffs will be suspended on imports from Mexico and Canada that comply with the 2020 USMCA trade pact for the next month. However, imports that do not meet USMCA standards will still face the full 25 per cent tariff. For example, imports of auto-related goods from Canada that adhere to the trade deal will be exempt, while potash imports from Canada will face a 10% tariff. Approximately 62 per cent of imports from Canada are not USMCA-compliant, and 50 per cent of Mexican imports will still be taxed.

Under the USMCA, around 50 per cent of imports from Mexico and 36 per cent from Canada qualify for tariff-free trade. However, some goods—like avocados—are not fully compliant due to high costs associated with compliance. Despite this, many non-compliant goods are still treated as if they are covered under the trade agreement, avoiding the 25 per cent tariff for now.

While US-Mexico relations seem to have improved, tensions with Canada remain high. Despite a temporary pause in tariffs, Canadian Prime Minister Justin Trudeau’s relationship with Trump remains strained, particularly regarding Canada’s dairy industry protections. A heated phone conversation between the two leaders on Wednesday included Trump’s complaints about Canadian tariffs, while Trudeau refrained from using profanity. Ontario Premier Doug Ford also responded to Trump’s tariff threats by imposing a 25 per cent surcharge on electricity exports to the US starting Monday, affecting 1.5 million Americans in Minnesota, New York, and Michigan.

Although Trump has granted a temporary reprieve on tariffs with Mexico and Canada until April 2, the situation remains fluid. The US is still facing uncertainty over its trade policies, with reciprocal tariffs expected to take effect soon. As negotiations continue, the economic impact of these tariffs and the future of the U.S.-Mexico-Canada trade relationship remain uncertain.