Trump Pauses Tariffs on Mexico and Canada for Another Month
On Thursday, U.S. President Donald Trump paused American tariffs on Canada and Mexico for the second time. The pause is the latest in a long series of changes: his first administration negotiated a zero-percent tariff deal in 2019 - the U.S. Mexico-Canada Agreement (USMCA) - but after winning the election in November 2024, Trump announced the imposition of 25 percent tariffs on most goods from USMCA members. The White House paused this tariff hike on February 3 before it entered into effect, then put it into action on March 4, then paused it again on Thursday.
The Thursday pause occurred in two phases. In the morning, Trump announced via social media that he would temporarily suspend the tariff increase on Mexico, but did not mention Canada. Canadian Prime Minister Justin Trudeau confirmed that tariffs on Canadian goods remained in effect. Later in the day, Trump signed two executive orders exempting both Mexican and Canadian goods for another month.
The pause is temporary, and the tariffs will resume on April 2 unless another solution is announced. Mexican and Canadian goods traded outside of the USMCA framework - a limited category that includes some Mexican-built vehicles - are still subject to 25 percent tariffs in the interim. An additional tariff of 10 percent on all Chinese goods remains in effect.
"[The pause] basically makes it more fair for our car manufacturers during this short interim period before April 2," Trump said. "Long term, the United States will be very strong with what's happening here."
The latest pause follows a sell-off in the stock market, the announcement of retaliatory tariffs on U.S. goods by the Mexican and Canadian governments, and a series of complaints from major American manufacturers - particularly automakers. The tightly integrated North American parts supply chain left American carmakers exposed to the added costs from paying tariffs at each border crossing, which they would have to pass on to consumers. By contrast, carmakers in Europe, Japan and Korea were not exposed to the tariffs, and this gave their products a new price advantage over American autos.
At the signing ceremony, Trump said that the pause had nothing to do with the markets. Following news of the new tariff pause, the Dow closed down by one percent and the Nasdaq by 2.6 percent, reflecting continued uncertainty in the market.