In another yo-yo move, U.S. President Donald Trump has again issued a one-month reprieve from the 25 per cent tariffs he imposed on most Canadian exports earlier this week.
The sudden reversal follows steep losses on the U.S. stock markets and mounting pressure from businesses, lawmakers, and State Governors. The temporary exemption applies to goods covered by the U.S.-Mexico-Canada Agreement (USMCA), a trade deal negotiated during Trump’s first term. However, the tariff delay does not extend to all Canadian exports, with key sectors such as steel and aluminum still subject to duties.
The latest policy shift marks the second time in a month that Trump has backtracked on his sweeping tariff measures. White House officials confirmed that approximately 38 per cent of Canadian imports and 50 per cent of Mexican imports will be temporarily exempt under the duty-free terms of the USMCA. The move offers a reprieve for industries reliant on cross-border trade but leaves lingering uncertainty over future tariff policies. Energy products, which account for a significant share of Canadian exports, remain subject to a 10 per cent tariff, reinforcing concerns about economic instability.
Trump has tied the tariffs to Canada and Mexico’s efforts to curb fentanyl trafficking into the U.S., though many lawmakers remain skeptical of the connection. His administration has indicated that reciprocal tariffs could be introduced in April, based on an assessment of trade barriers faced by American companies. This approach has raised concerns that Canada’s dairy import restrictions and Mexico’s foreign investment rules in the energy sector could become targets for further tariff action. The shifting policies have left businesses uncertain about long-term trade conditions.
Despite the temporary relief, the tariff policy continues to impact key industries. The exclusion of steel and aluminum from the exemption means that manufacturers reliant on these materials will face higher costs. Farmers, who were bracing for higher fertilizer prices due to tariffs on potash imports from Canada, received some relief with the removal of duties on the mineral. The agricultural sector had already been under pressure from global supply chain disruptions and price increases driven by the war in Ukraine.
Trump’s latest tariff suspension has led to mixed reactions across North America. While Mexican officials welcomed the exemption on USMCA-covered goods, Trump’s public statements on Canada have remained critical. The White House’s announcement comes one day after a separate exemption was granted to auto manufacturers operating under USMCA rules. As the April 2 deadline approaches, uncertainty remains over whether the administration will proceed with its planned reciprocal tariffs or extend the current exemptions further.
