Amid rising concerns over a potential trade war, U.S. President Donald Trump signed orders on Thursday to postpone newly imposed tariffs on imports from Mexico and Canada under the North American trade deal.
This decision came just hours after Trump held discussions with Mexican President Claudia Sheinbaum and negotiations took place between Canadian officials and the Trump administration.
What does this tariff exemption mean? When will it take effect? Here’s a breakdown of 10 key points:
- Postponement Order: Donald Trump’s executive orders to reverse 25% trade tariffs on Mexico and Canada imports were signed on Thursday. Goods covered under the United States-Mexico-Canada Agreement (USMCA) will be exempt from the new tariffs.
- USMCA’s Role: Trump originally negotiated the USMCA during his first term, establishing a free trade zone between the three North American nations.
- Temporary Relief: The tariff delay, set until April 2, brings relief to industries such as the automobile sector, which was expected to bear the brunt of the increased tariffs. Car parts often cross U.S.-Canada borders multiple times during production.
- Market Impact: Stock markets took a sharp hit following Trump’s initial announcement of the 25% tariffs, AFP reported.
- Limited Coverage: Not all imports from Mexico and Canada fall under USMCA. Items excluded from the agreement could still face a 25% tariff.
- Percentage Breakdown: According to CNN, approximately 50% of Mexican imports and 36% of Canadian imports qualify under USMCA, while traders dealing with excluded goods may seek exemptions.
- Canada’s Burden: A White House official stated that around 62% of Canadian imports will still be subjected to the new tariffs, though many energy-related products will face a reduced 10% rate.
- Trump’s Mexico Deal: “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.
- Canada’s Reaction: On Thursday, Canadian PM Justin Trudeau said that Ottawa will remain in a trade war with Washington for “the foreseeable future” even if there are “breaks for certain sectors.” “Our goal remains to get these tariffs, all tariffs removed,” Trudeau stated.
- Uncertain Future: While the delay provides some breathing room, the possibility of a full-scale trade conflict remains, as negotiations between the U.S., Mexico, and Canada continue.