Trump Temporarily Exempts Mexico from Tariffs Through April 2

Trump has granted Mexico an exemption from tariffs on trade-pact-covered items till April 2.

President Donald Trump of the United States has declared that Mexico will be exempt from paying tariffs on items covered by the USMCA until April 2. He hasn’t yet stated if Canada will likewise be spared, but a Canadian official source told the BBC that the nation anticipates being treated similarly.

In just two days, Trump has reversed two tariff-related decisions. He temporarily exempted automakers from a 25% import tax that went into force the day before on Wednesday.

In a CNBC interview, Commerce Secretary Howard Lutnick proposed an extension of the tariff moratorium for auto components imported from Canada and Mexico to all USMCA-covered goods. Signed in 2020 as a replacement for the North American Free Trade Agreement (NAFTA), the trade agreement regulates trade in important industries such as dairy, timber, and cars and is reviewed every six years.

After speaking with Mexican President Claudia Sheinbaum, Trump said on Truth Social that Mexico would be granted a temporary exemption. “Excellent and respectful,” Sheinbaum said, the two countries agreed to work together to reduce the flow of fentanyl into the United States and the trafficking of firearms into Mexico.

Justin Trudeau, the prime minister of Canada, reacted to Lutnick’s comments with cautious optimism, describing them as “promising.”

On social media, Trump has subsequently attacked Trudeau, saying the Canadian leader has performed a “dreadful job” for the nation. Despite the incident, there are rumors that Canada may soon receive an exemption.

However, Ontario Premier Doug Ford indicated that Canada would be prepared to retaliate if needed by announcing that the province would begin imposing a 25% tax on power exports to 1.5 million households and businesses in New York, Michigan, and Minnesota on Monday.

Tensions between the US and its neighbors in North America as well as with China have been exacerbated by the tariffs. Trump claims that by enacting tariffs, American industries will be safeguarded and domestic production will increase. But many economists caution that such actions would cause supply chains to break and consumer prices to rise.

Fears of tariffs caused imports to spike in January, according to the US Commerce Department, increasing the US trade deficit by 34% to over $130 billion. Imports also increased by 10% during the month.

As the deadline of April 2 draws near, North American businesses and officials are still anxiously expecting further information about how trade ties would develop under the USMCA.