In a move that seems aimed at tempering rising trade tensions, US President Donald Trump recently signed orders to broaden the scope of goods exempted from the tariffs he introduced on imports from Canada and Mexico earlier this week.
This is not an isolated occurrence; it marks the second instance in as many days that the Trump administration has eased taxes on imports from its largest trade partners. The measures initially caused unease among businesses and shook financial markets. On Wednesday, President Trump offered temporary relief to carmakers, sparing them from the harsh bite of 25% import levies mere hours after they had been enforced.
Mexico’s President, Claudia Sheinbaum, has expressed gratitude for what she sees as a conciliatory move, while Canada’s finance minister hinted at reciprocating by delaying Canada’s own proposed round of retaliatory tariffs against US products.
Amid this backdrop, Canadian Prime Minister Justin Trudeau revealed Thursday morning that his recent phone call with President Trump over the tariffs was anything but vanilla. Reports suggest the conversation was peppered with strong language, describing a trade landscape that appears unstable for the foreseeable future despite pockets of tariff relief.
“Our objective remains clear: the removal of all tariffs,” Trudeau asserted, laying bare the ongoing trade war that is brewing between these allies. Canada has already taken steps to counter with a C$30bn ($21bn, £16bn) list of US goods facing tariffs.
Stock markets seemed to reflect apprehensions brought on by these tensions. By Thursday afternoon, a dip was evident across major indexes, with the S&P 500— a bellwether for the American economy—dropping nearly 1.8%.
In an insistency tinged with defiance, Trump refuted claims that concerns about the stock market had driven his decision to carve out exemptions. “It’s got nothing to do with the market,” he proclaimed. “I’m not worried about the short term. Long term, America’s future is bright with what we’re doing.”
The exemptions focus on goods traded under the US-Mexico-Canada Agreement (USMCA), a pact signed during Trump’s initial term. An analysis from Trade Partnership Worldwide identifies televisions, air conditioners, avocados, and beef among the items covered by these exemptions.
An insider from the White House noted that while around 50% of US imports from Mexico and 62% from Canada could still face tariffs, these figures might fluctuate as companies adjust their operations in response.
Further plans for tariffs were not sidelined, though. The administration maintains its intent to push forward with new duties slated for an April 2nd unveiling, where officials will outline targeted, “reciprocal” trades on a global scale.
Trump shared that he decided to grant these exemptions following a conversation with Sheinbaum. The aim? To lend carmakers and parts suppliers a hand while also reducing tariffs on potash—a critical component for US agricultural fertilizers—from 25% to 10%.
Sheinbaum characterized her conversation with Trump as “excellent and respectful,” discussing collaborative efforts between the two nations to curb the flow of fentanyl into the US and halt the gun trade heading into Mexico.
But not everyone was convinced this diplomatic détente was meaningful. Ontario Premier Doug Ford, overseeing Canada’s most populous province, argued, “A pause on some tariffs is meaningless.” Before official announcements were made, he maintained his stance to implement a 25% tariff on electricity supplied to New York, Michigan, and Minnesota, despite his reluctance. “Frankly, it bothers me,” he confided. “We have to do this, but I wish we didn’t.”
This sentiment is mirrored by Treasury Secretary Scott Bessent, who dismissed retaliation as futile in advancing trade negotiations. “If you want to act like a numbskull, like Justin Trudeau, forcing tariffs will only make them rise,” he elucidated candidly during a session at the Economic Club of New York.
Trade, however, remains a lifeline intertwined daily among the US, Canada, and Mexico, further entrenching their economies through decades of open trade. While Trump positions tariffs as a safeguard for American industry, ensuring manufacturing stays robust, economists caution that consumers might bear the brunt through raised prices, hinting that economic repercussions for Mexico and Canada could be severe.
Approximately $1bn in trade crosses US borders from its North American partners daily without harnessing duty-free exemptions under the USMCA. “It’s uncertain whether importers will start claiming USMCA advantages,” notes Daniel Anthony, President of Trade Partnership Worldwide, “but there’s a significant financial stake on the line.”
The implications of Trump’s trade policy are already reverberating through the US economy, seen in January’s import surge prompted by tariff anxieties, leading to a 34% spike in the trade deficit, as reported by the Commerce Department.
Gregory Brown, at the helm of BenLee, which manufactures large-scale trailers, acknowledges having to repeatedly adjust prices over the past five weeks—an adaptation to Trump’s imposition of expanded tariffs on steel and aluminum set to take effect soon. Still, Mr. Brown finds his customers ready to absorb these costs, signifying economic resilience. “It’s an incredible growth economy,” he observes, acknowledging prior strengths under Biden, while recognizing Trump’s quick adjustments as reflective of a business-savvy president.
However, not all hold a positive outlook on this unpredictable trade climate. An investment manager hinted at future downturns, “I think a recession will precede any potential recovery. We must brace for the worst before we see the benefits.”
Edited By Ali Musa
Axadle Times International – Monitoring.
