Trump Announces Month-Long Suspension of Mexico Tariffs
By Michael Race and Jonathan Josephs
US President Donald Trump has announced that Mexico will not pay tariffs on goods under the US-Mexico-Canada trade pact until April 2. However, he has not confirmed if this suspension applies to Canada. A Canadian government source told the BBC that Canada expects a similar exemption.
This marks Trump’s second tariff reversal in two days. On Wednesday, he temporarily spared carmakers from 25% import taxes, just a day after they took effect.
Commerce Secretary’s Statement
Earlier on Thursday, Commerce Secretary Howard Lutnick told CNBC that the tariff exemption for car parts from Canada and Mexico might extend to all USMCA products. The USMCA, established during Trump’s first term, covers various sectors, including cars, dairy, and lumber. Moreover, the agreement undergoes review every six years.
Trump’s Announcement and Mexico’s Response
On Thursday, Trump posted on Truth Social, stating that Mexico would be exempt from tariffs until April 2.
“After speaking with President Claudia Sheinbaum of Mexico, I have agreed that Mexico will not be required to pay tariffs on anything under the USMCA Agreement,” he wrote.
Sheinbaum described their call as “excellent and respectful.” She added that both countries would collaborate to curb fentanyl smuggling into the US and prevent gun trafficking into Mexico.
Expected Exemption for Canada
Despite Trump’s earlier criticism of Canadian Prime Minister Justin Trudeau, an exemption for Canada is expected soon. However, Ontario Premier Doug Ford told CNN that Ontario would impose a 25% tariff on electricity sent to New York, Michigan, and Minnesota starting Monday.
Background on USMCA and Trade Tensions
The USMCA replaced NAFTA in 2020 after years of negotiations. Every day, billions of dollars in goods move between the US, Canada, and Mexico, showing their economic interdependence.
However, tariffs have sparked a trade war between the US and its neighbors, as well as China. Trump argues that tariffs will protect American industries and boost manufacturing. Yet, many economists warn they could increase prices for US consumers.
Tariffs are paid by businesses importing goods. Many American companies have raised concerns about tariffs on Canada and Mexico, given their intertwined supply chains.
Economic Impact
In response to Trump’s initial 25% tariffs, Canada and Mexico imposed retaliatory import levies. Meanwhile, the US Commerce Department reported a sharp rise in imports in January due to tariff fears.
The trade deficit increased by 34% to over $130 billion (£100bn), with imports rising by 10%.
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