Howard Lutnick told CNBC “hopefully Mexico and Canada will have done a good enough job on fentanyl” that the U.S. will focus only on reciprocal tariffs. Read More Breaking News
Topline
President Donald Trump will delay his sweeping 25% tariffs on Canada until April 2 for any goods that are covered by an existing trade deal, multiple outlets reported Thursday, after Trump announced a similar pause for tariffs on Mexico—temporarily backing off from the trade strategy.
Key Facts
Trump signed executive actions on Thursday that will exempt products traded under the United States-Mexico-Canada Agreement until April 2, when Trump has said reciprocal tariffs would take effect, according to multiple reports.
The move follows Commerce Secretary Howard Lutnick telling CNBC he expected Trump would “come to the agreement today” that goods would be temporarily exempt under the USMCA, which Trump negotiated in his first term.
In a post on Truth Social about an hour after Lutnick’s original comments on CNBC, Trump said he and Mexican President Claudia Sheinbaum agreed Mexico will not pay tariffs on anything covered by USMCA until April, a move Trump said was “an accommodation, and out of respect for” Sheinbaum.
Trump enacted 25% tariffs on Canada and Mexico on Tuesday because he was displeased with their response to fentanyl crossing the border into the U.S., though he has since made a number of changes to the tariffs, including granting a one-month delay for automakers.
“Hopefully Mexico and Canada will have done a good enough job on fentanyl that this part of the conversation will be off the table and it will move just to the reciprocal tariff conversation,” Lutnick said.
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How Did The Market Respond To The Tariff News?
Stock market losses pulled back following Lutnick’s comments, as the benchmark S&P 500 moved from a more than 1.5% daily loss to a roughly 0.7% daily drop by late morning. Stocks are still down significantly this week in large part due to tariff news, with the S&P down nearly 3% since Friday, hitting its lowest level since pre-election.
Surprising Fact
While Lutnick said the tariff pause would likely apply to both Canada and Mexico, Trump was still bashing Canada on Truth Social about 30 minutes before he confirmed Mexico’s tariff pause. “Believe it or not, despite the terrible job he’s done for Canada, I think that Justin Trudeau is using the Tariff problem, which he has largely caused, in order to run again for Prime Minister,” Trump wrote on Truth Social, adding: “So much fun to watch!”
Key Background
Trump first said he was going to enact 25% tariffs on Canada and Mexico—two of the U.S.’s largest trade partners—in February, but both countries received a one-month pause after they agreed to implement more border protections. Trump did enact a 10% tariff on China in February, and he doubled that tariff to 20% on Tuesday, granting an exception for shipments under $800. Leaders from Canada, Mexico and China have all threatened retaliatory tariffs against the U.S., and Trump addressed the potential negative impacts of his tariffs on Tuesday night at his joint address to Congress. He asked farmers and other Americans hurt by tariffs to “bear with (him)” and said, “it may be a little bit of an adjustment period.” Trump had been threatening tariffs since before he won the election in November, and while the actual added cost to consumers from tariffs is unclear, most economists have said tariffs generally lead to higher prices.
Further Reading
Trump Exempts Carmakers From Canada And Mexico Tariffs For One Month (Forbes)
