United States President Donald Trump, on Thursday, paused tariffs on several imports from Mexico and Canada for a month. Earlier, he had imposed 25 percent tariffs on almost all imports from both countries.
He first announced a halt on the tariffs for Mexico after a phone call with that country’s president, Claudia Sheinbaum. Later, he extended that reprieve to Canada.
Here is what happened, which products the pause applies to and what comes next:
What happened?
On Thursday, Trump signed orders temporarily exempting goods from Mexico and Canada that are covered by the US-Mexico-Canada trade agreement (USMCA) from the 25 percent tariffs. The order suspending tariffs took effect at 05: 01 GMT on Friday.
These tariffs had kicked in on Tuesday, a month after Trump had first announced 25 percent tariffs on all goods imported from Mexico and Canada, and an additional 10 percent tariffs on imports from China, in February. The tariffs were initially supposed to come into force on February 4, but Trump had postponed them by a month following negotiations with Sheinbaum and Canadian Prime Minister Justin Trudeau.
On Wednesday, Trump had temporarily exempted car manufacturers from the 25 percent tariffs for a month.
The tariff pause announced on Thursday will remain until April 2, Trump announced. That’s when , Trump has threatened to impose a global regime of reciprocal tariffs on all US trading partners: Each country will face the same tariff rates that it subjects US goods to.
But even before that, Trump is still set to impose a 25 percent tariff on steel and aluminium imports on March 12. Canada and Mexico are big exporters of these products to the US – particularly Canada, which supplies the US with most of its aluminium.
What’s behind Trump’s tariff pause?
In his Truth Social post, Trump wrote: “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. This Agreement is until April 2nd”.
Trump added that he did this “out of respect” for Sheinbaum, adding the US and Mexico have had a good relationship and the two countries are working together to regulate undocumented migration and the flow of fentanyl into the US.
He later said Canadian exports to the US covered by the USMCA would also be similarly exempt.
What is the USMCA?
USMCA is short for United States-Mexico-Canada Agreement, a free-trade agreement negotiated during Trump’s first term.
It was signed in 2018 and came into force on July 1, 2020, replacing the 1994 North American Free Trade Agreement (NAFTA).
The USMCA is supposed to be reviewed every six years.
How much relief does Mexico get?
While details of specific products that will be exempt are unclear, the overall benefit to Mexican exports is significant.
In 2024, Mexico’s total exports to the US were worth about $505.8bn. According to US Census Bureau data, the exports that fell under the USMCA were about $249.7bn.
This means Trump’s reprieve will apply to about 49 percent of Mexico’s exports to the US.
How much relief does Canada get?
In 2024, Canada’s exports to the US were worth about $412.7bn. Out of these, about $156.9bn were under the USMCA.
Hence, Trump’s pause applies to 38 percent of Canada’s exports to the US.
Almost all agricultural products traded between the US and Canada fall under the USMCA. Additionally for Canada, Trump’s reprieve also applies to potash, a fertiliser.
The pause does not fully cover energy products, on which Trump has imposed a separate 10 percent tariff. Canada is the biggest source of US oil imports.
How have Mexico and Canada responded?
Mexican President Sheinbaum posted on X on Thursday, “We had an excellent and respectful call in which we agreed that our work and collaboration have yielded unprecedented results, within the framework of respect for our sovereignties”.
While Mexico had initially planned to announce retaliatory tariffs on Sunday at a public event in Zocalo, the heart of capital Mexico City, that gathering is now poised to be more of a celebration of the reprieve.
When Trump first announced the tariffs, Canada imposed retaliatory tariffs worth $30 billion Canadian dollars ($21bn) on US products including orange juice, peanut butter, cosmetics, footwear and paper products. Two Canadian officials told The Associated Press news agency on condition of anonymity that these tariffs will remain in place.
Canada has delayed its second wave of retaliatory tariffs on $125 billion Canadian dollars ‘ ($87.3bn) worth of US imports until April 2, Canadian Finance Minister Dominic LeBlanc wrote in an X post.
Doug Ford, the premier of Canada’s Ontario, also said the 25 percent tariffs on Ontario’s electricity, which is supplied to 1.5 million Americans in Minnesota, New York and Michigan will remain. “A pause on some tariffs means nothing. Until President Trump removes the threat of tariffs for good, we will be relentless”, Ford wrote in an X post.
Canadian Prime Minister Justin Trudeau, who is stepping down from his position after elections for his Liberal Party’s leadership on Sunday, told reporters he saw a trade war between the US and Canada in the foreseeable future after he had a call with Trump on Wednesday. “It was a colourful call. It was also a very substantive call”, Trudeau said.
