(Image source from: x.com/WhiteHouse)
On Thursday, US President Donald Trump announced a postponement of certain tariffs aimed at Canada and Mexico, prompting Ottawa to suspend a series of countermeasures planned for implementation. This decision has brought a much-needed respite to both businesses and consumers following a sharp decline in financial markets. Stock values plummeted after Trump's duties, which reached as high as 25 percent, were put into effect on Tuesday. Economists warned that these broad tariffs could adversely affect US economic growth and increase inflation. However, on Thursday, Trump signed executive orders to delay the new tariffs on imports from Canada and Mexico that fall under a North American trade pact, while he dismissed the idea that his actions were connected to the market instability.
This pause, effective until April 2, benefits automobile manufacturers significantly, as parts frequently cross the North American borders during the manufacturing process. Following discussions with the "Big Three" US automakers—Stellantis, Ford, and General Motors—Washington announced an initial one-month exemption for vehicles traveling through the United States-Mexico-Canada Agreement (USMCA).
A White House official informed reporters that approximately 62 percent of Canadian imports will still incur the new tariffs, largely affecting energy products, which are subject to a reduced rate of 10 percent. Roughly fifty percent of Mexican imports are routed through the USMCA. Trump remarked on Thursday that the recent developments have made the situation significantly more advantageous for American car manufacturers. Shortly after this announcement, Canadian Finance Minister Dominic LeBlanc communicated on X that Canada would refrain from implementing the second wave of tariffs on $125 billion worth of US goods until April 2, as efforts continue towards the elimination of all tariffs.
Trump indicated further tariffs would be introduced on April 2, asserting they would be "reciprocal in nature." He had previously pledged reciprocal tariffs to address practices that the US deems unfair. There remains the potential for Canadian and Mexican products to be subject to these levies. He also stated he would not alter the broad tariffs on steel and aluminum imports, which are scheduled to begin next week. Despite the partial tariff delay, US stock markets once again experienced a downturn on Thursday.
During a press conference in the Oval Office, Trump mentioned that he had a "very good conversation" with Mexican President Claudia Sheinbaum, suggesting "tremendous progress" on issues such as illegal immigration and drug trafficking entering the United States—concerns that contributed to the imposition of tariffs on Mexico, Canada, and China. His comments sharply contrasted with the ongoing tensions with Canadian Prime Minister Justin Trudeau, who remarked that Canada will remain in a trade conflict with the US for "the foreseeable future" despite possible relief for certain sectors. Trudeau reiterated, "Our objective continues to be the removal of all tariffs." According to both Canadian and US government statistics, Canada supplies less than one percent of the fentanyl in the US black market. In response to US allegations regarding its involvement in the fentanyl supply chain, China has asserted that this is a domestic concern that cannot be resolved through tariffs.
Scott Lincicome, the vice president of general economics at the Cato Institute, stated that Trump’s reduction of tariffs represented "an acknowledgment of economic facts." He explained that this decision recognized the detrimental effects tariffs have on supply chains, highlighted that American consumers ultimately bear the cost of these taxes, and indicated that "the market disapproves of them, particularly due to the uncertainty they create," according to Lincicome in comments to AFP. Since the beginning of his second term in January, Trump has threatened to impose tariffs on both friends and rivals. US Treasury Secretary Scott Bessent remarked on Thursday that he did not believe Trump’s tariffs would contribute to inflation, asserting that any effects on pricing would probably be short-lived. While addressing the Economic Club of New York, he noted that "access to affordable goods doesn’t define the American Dream," emphasizing instead that the dream is rooted in the pursuit of economic security and the possibility of upward mobility for individuals. Trump has characterized tariffs as a means of generating revenue for the US government and addressing trade deficits. In January, the US trade gap reached an unprecedented high, increasing by 34 percent to $131.4 billion, driven by a rise in imports. Analysts suggest that the deficit may have been amplified by increased gold imports, while also indicating that businesses seemed to be taking preemptive measures in anticipation of tariffs.
