Trump Pauses Some Canada and Mexico Tariffs

President Donald Trump on Thursday signed executive actions that delay for nearly one month tariffs on all products from Mexico and Canada that are covered by the USMCA free trade treaty, a significant walkback of the administration’s signature economic plan that has rattled markets, businesses and consumers.

The executive actions follow a discussion Trump held Thursday with Mexican President Claudia Sheinbaum and negotiations between Canadian and Trump administration officials.

“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 wrote on Truth Social Thursday, after a phone conversation with the Mexican president. He said the tariffs would be delayed until April 2. The USMCA is the United States-Mexico-Canada Agreement, negotiated by Trump during his first term, that makes the three North American countries a free trade zone.

“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,” Trump added. “Thank you to President Sheinbaum for your hard work and cooperation!”

Sheinbaum, in a post on X, thanked US President Donald Trump for a “respectful” discussion about the tariffs he imposed.

Sheinbaum said that “virtually all” of Mexico’s trade with the United States is included in the US-Mexico-Canada Agreement.

“Practically all the trade we have with the United States is within the Mexico, United States, Canada Agreement. There is a part that has to do with rules of origin, but everything is practically within the trade agreement,” Sheinbaum said at a news conference Thursday.

However, a White House official on a call with the press added some nuance to that argument: About 50% of imports from Mexico and 36% of imports from Canada are covered under the agreement, the official said, but many more items – such as avocados – are generally not covered because of the high cost of of compliance. However, those items that technically are not in compliance with USMCA have in effect been treated at customs as if they were, or they weren’t subject to tariffs.

It’s complicated trade policy, and the White House official suggested those goods producers could register to comply with USMCA rules to avoid the 25% tariff for a month. But the official referred the press to the US Trade Representative for more details about which products will maintain the 25% tariff and which won’t once those details become available.

Included in the USMCA-compliant goods are autos, which Trump announced Wednesday would be subject to a one-month reprieve from the tariffs. The administration said the delay would give automakers time to move more production to the United States to avoid tariffs, which are now set to go into effect next month. But that is almost certain not to happen, because that would mark a significant undertaking, requiring massive hiring, investment and strategic planning.

Energy from Canada, however, is not included in the USMCA, the White House official said. So that lower 10% tariff is expected to remain in place, boosting gas prices in the Northeast United States. But the Trump administration temporarily on Thursday reduced the tariff on Canadian potash to 10% (from the 25% tariff imposed Tuesday) to give farmers a bit of a break.