In a pattern reminiscent of previous trade actions, the Trump administration has once again suspended tariffs on certain Canadian and Mexican goods, mere days after their implementation. This temporary reprieve is set to last until April 2, with uncertainty looming over whether the tariffs will be reinstated at that time.

The new tariff structure includes:

• 25% tariffs on goods not meeting USMCA rules of origin 
• 10% tariff on certain energy products from Canada outside USMCA preference
• 10% tariff on potash from Canada and Mexico outside USMCA preference
• No tariffs on goods qualifying for USMCA preference

This decision echoes a similar move made in early February when Trump initially announced tariffs on select Mexican and Canadian products. Subsequently, he paused these tariffs for 30 days after both nations reaffirmed their commitment to existing agreements established during the Biden administration.

The latest development underscores the unpredictable nature of U.S. trade policy under Trump’s leadership. Prime Minister Justin Trudeau described the situation as “chaos, unpredictability and constantly moving goal posts from a White House that doesn’t play by normal trade rules”.

The exemption applies to goods that fall under the USMCA, which covers the vast majority of trade between the two countries.

The United States-Mexico-Canada Agreement (USMCA) is a free trade agreement that replaced the North American Free Trade Agreement (NAFTA) during President Trump’s first term. The USMCA was signed on November 30, 2018, and was touted by Trump as a major achievement in delivering fairer and more reciprocal trade for Americans. It entered into force on July 1, 2020.

Trump stated the tariffs were in an effort to curb immigration and fentanyl from the northern and southern border.

Mexico

President Sheinbaum deployed 10,000 National Guard troops to the U.S. border, just as Mexico had committed to prior to Trump threatening tariffs in January 2025. 

This led to 

• Transferring 29 high-ranking drug traffickers to the United States
• Providing data showing a 40% reduction in U.S. seizures of opioids at the southern border over the past month
• Accepting deportees not only from Mexico but also from other nations

According to data from U.S. Customs and Border Protection (CBP) and other federal agencies:

1. Approximately 80-89% of individuals convicted for fentanyl trafficking were U.S. citizens.
2. In 2022, U.S. citizens accounted for 89% of convicted fentanyl drug traffickers, which was 12 times greater than convictions of illegal immigrants for the same offense.
3. The United States Sentencing Commission data shows that 86.4% of those sentenced for trafficking fentanyl were U.S. citizens.
4. U.S. Attorney Tara McGrath stated that approximately 80% of people prosecuted and convicted of federal drug trafficking offenses were U.S. citizens.
5. The vast majority of fentanyl (about 90-93%) is seized at legal border crossings or interior vehicle checkpoints, not on illegal migration routes.

Sheinbaum has been vocal about the responsibility of the United States in curbing the delivery of assault weapons into Mexico. These statistics do not seem to be improving at this time. An estimated 70-90% of firearms traced after recovery in Mexico originated from or passed through the US.

Sheinbaum said she will continue to work on migration and fentanyl issues with the United States. Her post on X (formerly Twitter) reads: 

“Many thanks to President Donald Trump. We had an excellent and respectful call in which we agreed that our work and collaboration have yielded unprecedented results, within the framework of respect for our sovereignties. We will continue to work together, particularly on migration and security issues, which include reducing the illegal crossing of fentanyl into the United States, as well as weapons into Mexico. As mentioned by President Trump, Mexico will not be required to pay tariffs on all those products within the USMCA. This agreement is until April 2, when the United States will announce reciprocal tariffs for all countries.”

Canada

In the latest development of the ongoing trade dispute between Canada and the United States, Prime Minister Justin Trudeau has reaffirmed Canada’s commitment to maintaining retaliatory measures until all U.S. tariffs are removed. This stance comes despite a partial reprieve offered by U.S. President Donald Trump, who announced a pause on some Canadian goods tariffs until April 2.

Prime Minister Trudeau described his recent phone conversation with President Trump as “colourful” and tense at times. While acknowledging the call was substantive, Trudeau indicated that the trade war is likely to continue “for the foreseeable future”.

“We are in a moment right now where Canada has a very, very strong bargaining position, because Canadians are so united and unequivocal about standing up for our country and standing up for our fellow citizens and being very firm that this is an unjustified and unjustifiable trade war launched by the Americans,” Trudeau said.

While negotiations are underway to secure tariff relief for certain sectors, Trudeau warned that there’s no indication Trump is willing to drop levies entirely. Discussions are ongoing to potentially have all tariffs suspended until April 2, when Trump is expected to impose another round of retaliatory tariffs globally.

Despite the partial pause from the U.S., Canada is maintaining its initial retaliatory tariffs on CA$30 billion (US$21 billion) worth of American goods. These tariffs apply to a variety of items including American orange juice, peanut butter, coffee, appliances, footwear, cosmetics, motorcycles, and certain pulp and paper products.

Finance Minister Dominic LeBlanc announced that Canada has suspended a second wave of retaliatory tariffs following Trump’s executive order to pause some duties. This suspended wave would have imposed an additional CA$125 billion (US$87 billion) in tariffs on American products, including electric vehicles, fruits and vegetables, dairy, beef, pork, electronics, steel, and trucks.

Automakers

The CEOs of major automakers, including Ford, General Motors, and Stellantis, engaged in discussions with Trump about the tariffs.  Industry experts and analysts warned that the 25% tariffs would have a disastrous effect on the auto sector due to its deeply integrated cross-border supply chains.

U.S. manufacturing plants heavily depend on components sourced from Canada and Mexico. The Anderson Economic Group estimated that the tariffs could raise production costs for vehicles in North America by $3,500 to $12,000.  Union leaders expressed fears about the effects on local economies heavily reliant on automotive and parts manufacturing.

As a result of pressure from automakers, Trump’s tariff exemption applies to automakers operating under the U.S.-Mexico-Canada Agreement (USMCA).

Automakers and analysts argue that the one-month timeframe is insufficient for significant changes in production or supply chains.