Trump backtracks and postpones Canada, Mexico tariffs for a month

US President Donald Trump postponed 25% tariffs on various imports from northern and southern neighbours Canada and Mexico for a month as fears of an economic fallout from a broader trade war mount.

The White House insists that its tariffs aim to combat the smuggling of fentanyl and curb illegal migration into the United States. The taxes proposed by Trump however have caused a gaping wound in the decades-old North American trade partnership.

Trump’s tariff plans have also caused the stock market to plummet, alarming US consumers, but the 47th US president says he remains committed to his plans to impose “reciprocal” tariffs starting 2 April.

Imports coming into the US from Mexico will be exempt from the 25% tariffs for one month if they comply with the 2020 USMCA (UNITED STATES-MEXICO-CANADA Agreement) trade pact, according to the orders signed by Trump.

Imports from Canada – especially autos and auto parts – that comply with the trade deal, will also avoid the 25% tariffs for a month. Other Canadian products, including potash – which US farmers import – and Canadian energy products are to be tariffed at 10%.

Trump says the move was a “short term” manoeuvre to avoid hurting American car companies, and are not at all related to the market reactions, but offered no explanation on what happens next or what his plans are when the tariffs go back into effect in a month’s time.

“No, nothing to do with the market. I'm not even looking at the market because long term, the United States will be very strong with what's happening here. Now, these are countries and companies, foreign companies that have been ripping us off. And no president did anything about it until I came along. And then I did a lot about it,” said Trump.

Roughly 62% of imports from Canada are still likely to face the new tariffs because they’re not USMCA compliant, according to a White House official. The figure sits near the 50% mark for Mexican products.

Canada fights back

Canada’s initial retaliatory tariffs against the US will remain in place despite Trump’s postponement of some tariffs, according to two senior Canadian officials who spoke to the Associated Press on the condition of anonymity.

Canada’s initial $30 billion Canadian (€19.4 billion) worth of retaliatory tariffs have been applied on items like American orange juice, peanut butter, coffee, appliances, footwear, cosmetics, motorcycles and certain pulp and paper products are to remain in effect.

A second wave of Canadian tariffs on US products worth a further $125 billion Canadian (€81 billion) were suspended after Trump signed the executive order to pause some duties, according to Canada’s Finance Minister Dominic LeBlanc.

The second set of tariffs were set to roll out in three weeks, and would cover products such as electric vehicles, fruits and vegetables, dairy, beef, pork, electronics, steel and trucks.

Ontario Premier Doug Ford, chief of Canada’s most populous province, announced on Thursday that starting on Monday, Ontario will charge 25% more for electricity shipped to some 1.5 million Americans, in response to Trump’s tariff plans.

Ontario currently provides electricity to some homes in Minnesota, New York and Michigan.

“The only thing that’s certain today is more uncertainty. A pause on some tariffs means nothing. Until President Trump removes the threat of tariffs for good, we will be relentless,” said Ford in a post on X.

China responds to Trump’s tariffs

Chinese Foreign Minister Wang Yi said Beijing will continue to retaliate to the United States’ “arbitrary tariffs”, as he accused Washington of “meeting good with evil” in a press conference on Friday.

Yi says China’s effort to help the US contain its fentanyl crisis have been met with punitive tariffs, which are straining the ties between the countries.

“No country should fantasize that it can suppress China and maintain a good relationship with China at the same time,” Wang said. “Such two-faced acts are not good for the stability of bilateral relations or for building mutual trust.”

The two countries have been reengaging in tit-for-tat retaliatory tariffs since US President Donald Trump’s return to office in January. The US has imposed flat tariffs of 20% of all Chinese imports, while Beijing has countered with additional 15% duties on US imports including chicken, pork, soy and beef, and expanded controls on doing business with key US companies.

Commenting on the Trump administration’s policy of safeguarding US interests above international cooperation, Yi noted that if such approach was adopted by every country, would result in the “law of the jungle”.

Trump’s on-again, off-again tariffs threats have roiled financial markets, lowered consumer confidence and clouded many businesses in an atmosphere of uncertainty.

Major US stock markets briefly bounced off lows after Commerce Secretary Howard Lutnick previewed the month-long pauses on Thursday.

Significant declines already seen this week resumed within an hour. The S&P 500 stock index has fallen below where it was prior to Trump’s election. Lutnick however maintains that all instabilities caused by tariffs are only short-term, and necessary for the future of the US.