Trump Pauses Tariffs on Mexico and Canada: What’s Exempt and What’s Next?

Trump pauses tariffs on mexico and canada: what’s exempt and what’s next?

On Thursday, President Donald Trump announced a temporary pause on tariffs imposed on Mexico and Canada. 

The suspension will last for one month and applies to a significant portion of goods covered by the United States-Mexico-Canada Agreement (USMCA).

Related article - How mexico is responding to trump's tariff delay.

Key Details of the Tariff Pause

Trump's decision affects about half of Mexico’s exports and over a third of Canada's, as the tariffs are temporarily exempted under the USMCA. 

The suspension, effective from 05:01 GMT Friday, aims to provide relief before further tariff negotiations, which will resume on April 2.

Initially, Trump imposed a 25% tariff on most imports from Mexico and Canada, but the tariffs were delayed after discussions with Mexico’s President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau. 

Trump also announced a one-month exemption for car manufacturers earlier in the week.

The USMCA and Trade Implications

The United States-Mexico-Canada Agreement, which replaced NAFTA, was signed in 2018 and came into effect in 2020. Under the agreement, Trump’s suspension applies to products falling under this deal, benefiting both Mexico and Canada.

In 2024, Mexico’s exports to the US were valued at $505.8 billion, with nearly half of these exports (49%) covered by the USMCA. Similarly, Canada’s exports to the US amounted to $412.7 billion, with 38% covered by the USMCA. However, Trump’s decision doesn’t extend to energy products, such as oil, on which a 10% tariff remains.

Political Responses and Future Developments

The decision has sparked mixed reactions from both Mexico and Canada. Mexico’s President Sheinbaum expressed a positive and respectful tone following her call with Trump, highlighting collaborative efforts on migration and trade.

While Mexico had planned retaliatory tariffs, the pause has led to a shift in focus, with the announcement set to be celebrated rather than contested. 

Canada, however, has kept retaliatory tariffs in place, particularly on US goods like orange juice, peanut butter, and cosmetics, amounting to $30 billion. Canada has also delayed additional retaliatory tariffs until April 2.

Prime Minister Justin Trudeau noted the ongoing risks of a trade war, despite the temporary pause. Furthermore, Ontario’s Premier Doug Ford emphasized that the 25% tariffs on Ontario’s electricity exports would remain until more permanent solutions are achieved.

What’s Next for US-Mexico-Canada Trade?

Trump’s tariff decisions will continue to evolve, with key dates, including the expiration of the temporary suspension on April 2, marking pivotal moments. 

In the meantime, Canada and Mexico will continue to monitor the situation, with potential impacts on trade relations and tariffs still to be determined.

news from aljazeera

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Written By HowNHowTo.com 

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