(CNN) – President Donald Trump on Thursday signed an enforcement action delaying tariffs for nearly a month on all Mexican and Canadian products subject to the USMCA Free Trade Treaty.
The executive’s actions follow Trump’s discussions on Thursday between Mexican President Claudia Sheinbaum and officials from Canada and Trump administration.
“After talking to Mexican President Claudia Sheinbaum, I agreed that Mexico does not have to pay tariffs on those that fall under the USMCA agreement,” he said the tariffs would be delayed until April 2nd. The USMCA is the US-Mexico-Canada agreement negotiated by Trump during his first term of office that would turn three North American countries into free trade zones.
“I respected this as an accommodation and President Sinbaum. Our relationship is very good and we work hard at the border in both ways, both in stopping illegal foreigners from entering the US and similarly stopping fentanyl,” Trump added. “Thank you to President Sinbaum for your hard work and cooperation!”
Sinbaum thanked President Donald Trump for his “respectful” discussion about the tariffs he imposed in X’s post.
Sinbaum said “virtually everything” of Mexico’s trade with the United States is included in the US-Canada agreement.
“In fact, all transactions with the US are within the Mexico, the US and Canada agreements, Sinbaum said at a press conference Thursday.
But White House officials in the phone calls with the media added some nuance to the debate. Approximately 50% of imports from Mexico and 36% of imports from Canada are covered by the agreement, but personnel are generally not covered due to high costs of compliance. However, these items that are not technically USMCA compliant are not subject to customs as if they were actually handled by customs or are not subject to customs duties.
It’s a complicated trade policy, and White House officials have suggested that these commodity producers can register to comply with USMCA regulations to avoid a 25% tariff for a month. However, officials introduced the press to US trade officials for details on which products maintain 25% tariffs and whether those details will not be available.
USMCA compliant products include cars, and Trump announced it was announced Wednesday, and will be subject to a month’s reprieve from customs duties. The administration said the delays would give carmakers time to move more production to the US and avoid tariffs. But it’s almost certain that won’t happen. Because it marks important initiatives that require large-scale employment, investment and strategic planning.
However, the USMCA does not include energy from Canada, a White House official said. So the lower 10% tariff is expected to remain intact, leading to rising gas prices in the Northeastern US. However, on Thursday, the Trump administration temporarily reduced Canadian potash tariffs to 10% (from the 25% tariff imposed on Tuesday), giving farmers a bit of a break.
Complications with Canada
Trump frequently praised Sheinbaum, and on Thursday she told him she told him that she would celebrate the dramatic decline in the amount of fentanyl seized on the US border with Mexico between January and February, and that she would praise the increase in border control between the two countries.
But Trump has been sharply criticising Canadian Prime Minister Justin Trudeau, who accused Canadians of trying to capitalize politically on tariffs they felt. It was noteworthy that Trump initially announced a respite for Mexico rather than Canada, but he ultimately admitted it to Canada.
“Believe it or not, I think that despite the horrible work he did in Canada, Justin Trudeau is using the tariff issues he mostly caused to run again for the Prime Minister,” Trump wrote in the Social Post of Truth. “It’s so much fun to watch!”
Trudeau is equally and publicly critical of Trump, and he said at a press conference Thursday that he hopes Canada and the US will take part in the trade war in the near future.
And Trudeau said all retaliation measures in his country will be maintained unless the US completely rewinds tariffs, not temporarily.
Ontario Premier Doug Ford told CNN’s Wolf Blitzer on Thursday that his state is implementing 25% tariffs on electricity exports to 1.5 million American homes in Minnesota, Michigan and New York next week.
“It really bothers me that I have to do this,” Ford said. “Let’s drop these tariffs. Let’s renegotiate the USMCA deal he created. It’s not changed since he took office, and he said it was the biggest deal ever.”
On Monday, Ford threatened to block Ontario’s energy exports “with a smile on my face” if President Donald Trump’s tariffs on Canadian goods remain intact.
Stock will fall
Stocks fell sharply on Thursday, remaining low after Trump initially announced Canada’s reprieve. However, the shares reduced some of their losses after enforcement action was signed. The Dow closed about 427 points lower, closing at 1%. The wider S&P 500 fell 1.8%, while the more tech Nasdaq fell 2.6%.
The market is in the red during Trump’s presidency, due to the uncertainty caused by the administration’s trade policy. The Nasdaq fell nearly 8% since Trump took office and 10% down from its December peak, finishing in the revised territory on Thursday. The S&P 500 has fallen by more than 4% since Trump took office. Companies suspended employment, consumer confidence surged, investors withdrew from stocks and moved to safe shelters like government bonds.
“The fact that the stock market is rising or rising every day is not a driving force for our outcome,” Commerce Secretary Howard Luttonick said in a statement. “Our achievement is to train factories in the United States, to flourish American jobs, to train a new AI industrial revolution in America.
At the oval office signing ceremony, Trump denounced the recent market decline as “globalists.”
“I think it’s globalists who see how rich our country is, and they don’t like it,” Trump said. “It’s a big market out there. But once again they’ve been ripping this country off for years and they’re going to do great things, but we can’t keep this going on in America any more. Otherwise we won’t have a country anymore.”
Trump, a joint speech to Congress on Tuesday night, acknowledged that tariffs were unpopular and could cause some pain, especially by raising prices for Americans who have already withstanded inflation. In one of his more vulnerable moments during his speech, Trump pleaded for patience, asking farmers who could be hurt by retaliatory tariffs to “bear with me” and said “it would be a bit of a disturbance.”
Mexico, China and Canada are the top three trading partners in the United States. They shipped $1.4 trillion worth of goods to the United States last year, according to Commerce Department data. This accounts for more than 40% of the value of all the goods imported by the US last year.
The trade war between the three countries poses serious risks to all three economies, threatening to weaken growth, raise prices and spend workers’ costs.
