Trump changes course again, delays tariffs on some Mexican, Canadian imports

Washington: US President Donald Trump has postponed 25 per cent tariffs on certain imports from Mexico and Canada for a month amid widespread fears of the economic fallout from a broader trade war.

The White House insists its tariffs are about stopping the smuggling of fentanyl, but the taxes proposed by Trump have caused a gaping wound in the decades-old North American trade partnership. Trump’s tariff plans have also caused the stock market to sink and alarmed US consumers.

In addition to his claims about fentanyl, Trump has insisted that the tariffs could be resolved by fixing the trade deficit and he emphasised while speaking in the Oval Office that he still planned to impose “reciprocal” tariffs starting on April 2.

US President Donald Trump addresses Congress on Thursday.Credit: AP

“Most of the tariffs go on April the second,” Trump said before signing the orders. “Right now, we have some temporary ones and small ones, relatively small, although it’s a lot of money having to do with Mexico and Canada.”

The reprieve applies only to imports that are compliant with the trade agreement Trump negotiated with Canada and Mexico in his first term. About 62 per cent of imports from Canada and half of those from Mexico that weren’t compliant would probably still face the new tariffs, a White House official who insisted on anonymity said.

Mexico President Claudia Sheinbaum had planned to announce any retaliatory measures on the weekend, but Trump credited her with making progress on illegal immigration and drug smuggling as a reason for again pausing tariffs that were initially supposed to go into full effect in February.

“I did this as an accommodation, and out of respect for, President Sheinbaum,” Trump said on Truth Social. “Our relationship has been a very good one, and we are working hard, together, on the Border.”

Trump’s actions also thawed relations with Canada somewhat, after its initial retaliatory tariffs of $C30 billion ($33 billion) on US goods. The Canadian government said it had suspended its second wave of retaliatory tariffs on additional US goods worth $C125 billion.

Commerce Secretary Howard Lutnick hinted that the change in course would come.Credit: Bloomberg

Trump’s on-again, off-again tariff threats have roiled financial markets, lowered consumer confidence, and enveloped many businesses in an uncertain atmosphere that could delay hiring and investment.

Major US stock markets briefly bounced off lows after Commerce Secretary Howard Lutnick previewed the month-long pauses on CNBC. But significant declines already seen this week resumed within an hour. The S&P 500 stock index has fallen below where it was before Trump was elected.

Asked whether the stock market decline was due to his tariffs, Trump said: “A lot of them are globalist countries and companies that won’t be doing as well because we’re taking back things that have been taken from us many years ago.”

Sheinbaum said she and Trump “had an excellent and respectful call in which we agreed that our work and collaboration have yielded unprecedented results”, on a post on the social media platform X, formerly Twitter.

Mexico has cracked down on cartels, sent troops to the US border and delivered 29 top cartel bosses long chased by American authorities to the Trump administration in a span of weeks.

At a press conference, Sheinbaum elaborated on her call with Trump, saying she told the president that Mexico was making great strides in fulfilling his security demands.

“I told him we’re getting results,” Sheinbaum said. But the US imposed the tariffs, so she asked Trump “how are we going to continue co-operating, collaborating with something that hurts the people of Mexico?”

She added that “practically all of the trade” between the US and Mexico would be exempt from tariffs until April 2.

She said the two countries would continue to work together on migration and security, and to cut back on fentanyl trafficking to the US.

Mexican President Claudia Sheinbaum told Donald Trump that Mexico was making great strides in fulfilling his security demands.Credit: AP

From January to February, the amount of fentanyl seized at the border dropped more than 41 per cent, according to Sheinbaum, citing data from US Customs and Border Protection. She cited the dip as meeting a commitment made to Trump.

Still, relations between the US and Canada remain frosty. A senior Canadian government official said a call between Canadian Prime Minister Justin Trudeau and Trump became heated, with the US president using profanity while complaining about protections in Canada’s dairy industry. The official, who spoke on condition of anonymity as they were not authorised to speak publicly about the call, said Trudeau did not use profanity.

Ontario Premier Doug Ford, the leader of Canada’s most populous province, said that starting Monday, the province would charge 25 per cent more for electricity shipped to 1.5 million Americans in response to Trump’s tariff plan. Ontario provides electricity to Minnesota, New York and Michigan.

“This whole thing with President Trump is a mess,” Ford said Thursday. “This reprieve, we’ve went down this road before. He still threatens the tariffs on April 2.”

Ford’s office said the tariff would remain in place even if there was a one-month reprieve from the Americans. Ford has said that so long as the threat of tariffs continue, Ontario’s position will not change.

Lutnick said he would be watching fentanyl overdose deaths in the US as a key “metric” he would focus on when evaluating Canada and Mexico’s efforts to combat the synthetic opioid.

In his speech to a joint session of Congress Tuesday night, Trump portrayed tariffs – which he has also levied on China at 20 per cent due to their role in fentanyl production – as a source of increasing wealth and power for the United States.

Yet most economists expect the import duties to send prices higher, slow the economy, and potentially cost jobs.

The Yale University Budget Lab has estimated that the tariffs on Canada, China, and Mexico would increase inflation by a full percentage point, cut growth by half a percentage point and cost the average household about $US1600 ($2527) in disposable income.

Trump appeared to acknowledge Tuesday night that there could be some pain: “There’ll be a little disturbance, but we’re okay with that. It won’t be much.”

AP

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