President Donald Trump has issued tariff exemptions on various goods coming to the US from Mexico and Canada – just two days after he introduced the drastic tariffs, investors and businesses are working on whipping up trade policies before and after him.
The 25% tariff exemption enacted Tuesday applies to about half of the goods coming to the US from Mexico, with about 38% of goods from Canada reaching the North American trade agreements during Trump’s first term.
It was the second time Trump announced it in less than two months, and then betrayed tariffs on US neighbors. The move rattles the stock market, with companies warning that they can raise prices and cut back on profits. The Dow Jones Industrial Average and the S&P 500 are paced for their worst week since September.
“We’re looking forward to seeing you in the future,” said Chuck Dardas, president of Alphausa, a Livonia, Michigan auto parts manufacturer. He later added: It’s not that we can have complete certainty, but we don’t eat a certain diet. Well, I’ll wait until next month to see if x drops. ”
“The only thing is, certainly, we have 30 more days to worry about that,” Dardus said.
The exemption issued by Trump on Thursday continues until April 2, when Trump plans another round of retaliatory tariffs on goods from various countries. The exemption applies to things like potash used in fertilizers, but some Canadian energy products are not qualified and subject to 10% tariffs. And all other goods, including Mexican computers, will be subject to 25% tariffs, senior administrators said.
The US-Mexico-Canada Agreement (USMCA), which Trump announced as a victory in negotiations during his first term, allows three countries to move tariff-free items if they follow certain rules. The regulations require that the product be created entirely in North America or if it is made from components from other countries, it is effectively converted in North America. For products such as automobiles, 75% of content must come from North America.
Tariffs on non-USMCA-compliant goods could address past concerns, and were sent without US tariffs without meeting USMCA requirements that current US authorities procured for shipping Chinese goods to Mexico and subsequently transformed into a substantial USMCA.
On Tuesday, the Trump administration began charging US-based companies with 25% tariffs for importing goods from Canada and Mexico and bringing them into the country. Trump also increased tariffs on goods from China to 20%, along with the tariffs already in place since his first term.
Target, Best Buy and other companies warned that additional costs from tariffs could increase prices with thousands of products, including alcohol, fresh produce, cars and electronics.
“Grocery, School Supplies, Apparel: This ongoing uncertainty about tariffs raises anxiety in family pocketbooks and throws wrenches on future business plans and investments.
The day after the tariffs came into effect, the White House said it would begin exemptions for cars if businesses comply with USMCA transactions standards that the automaker said were doing. According to Anderson Economic Group estimates, tariffs could have added between $4,000 and $10,000 to the costs of cars made in North America.
In announcing them, Trump said he is using tariffs as a tool to empower pressures in Canada and Mexico and to do more to stop the flow of fentanyl to the US, but less than 1% of fentanyl seized at the US border comes from Canada. The US recorded 87,000 drug overdose deaths between October 2023 and September 2024. This is down from 114,000 the previous year, according to preliminary data from the Centers for Disease Control and Prevention.
After speaking with the CEO of the US automaker on Wednesday, Trump said he decided to issue the exemption, giving him time to adjust before introducing wider tariffs next month.
“There’s always a bit of a short-term interruption. I don’t think it’s going to get bigger, but the countries and businesses that are tearing us apart are not particularly pleased with what I’m doing,” Trump told reporters Thursday. “But America will be very happy. And you know, our farmers will be very happy, and once again, there will be chaos.”
Mexican President Claudia Sheinbaum said in a press conference Thursday that in a call with Trump, she cited a graph of US customs and border security showing a decline in fentanyl attacks that Trump had never seen before.
“In February alone, the decline in fentanyl attacks on the US side of the border with Mexico fell by 41.5%. He didn’t know about the graph until I sent it to him,” she said.
Trump also spoke with Canadian Prime Minister Justin Trudeau on Wednesday. He said earlier in the week there was a 97% decrease in fentanyl attacks from January compared to December.
