Puerto Vallarta, Mexico - President Donald Trump announced on Thursday that he would hold off for nearly a month on imposing tariffs on products from Mexico covered by the USMCA free trade agreement. The move marks a significant reversal for an economic policy that has stirred markets, businesses, and consumers.
Possible Pause for Canadian Tariffs Commerce Secretary Howard Lutnick said Thursday that Trump would likely announce a similar one-month postponement for Canadian tariffs later in the day, though a senior Canadian government official said that ongoing talks made it unclear whether any agreement would ultimately be reached.
“After speaking with President Claudia Sheinbaum of Mexico, I have agreed that Mexico will not be required to pay Tariffs on anything that falls under the USMCA Agreement,” Trump wrote on Truth Social, referencing a phone call with the Mexican leader. He stated the tariffs would be delayed until April 2. The USMCA (United States-Mexico-Canada Agreement) was negotiated by Trump during his first term, forming a free trade zone among the three North American countries.
“I did this as an accommodation, and out of respect for, President Sheinbaum. Our relationship has been a very good one, and we are working hard, together, on the Border, both in terms of stopping Illegal Aliens from entering the United States and, likewise, stopping Fentanyl,” Trump added. “Thank you to President Sheinbaum for your hard work and cooperation!”
Sheinbaum later posted on X, thanking Trump for a “respectful” conversation regarding the tariffs he had imposed.
Ongoing Uncertainty for Canada In an interview with CNBC, Lutnick indicated that tariffs on goods from Canada covered by USMCA—most of which faced a 25% tariff starting Tuesday—would “probably” be paused. Those tariffs are set to take effect on April 2 unless Mexico and Canada show what the administration considers significant progress on curbing fentanyl trafficking into the United States.
Despite these developments, a senior Canadian government official said negotiations with the Trump administration are still underway and that “there is no clarity on whether or not the tariffs will be lifted for Canada.”
Although Trump has offered praise for Sheinbaum, he has been sharply critical of Canadian Prime Minister Justin Trudeau, who he accuses of capitalizing on Canadians’ frustrations over tariffs for political gain. It remains unclear how that criticism might influence a potential pause on Canadian tariffs.
“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. “So much fun to watch!”
Trudeau, for his part, has been openly critical of Trump and said in a press conference Thursday that he anticipates a prolonged trade battle between the two nations.
Ontario Premier Doug Ford called for a renegotiation of USMCA rather than continuing a trade war. “Let’s just drop these tariffs. Let’s renegotiate the USMCA deal that he created,” Ford said. “It hasn’t changed since he was in office, and he said it was the greatest deal ever.”
Market Reaction Stocks dropped significantly on Thursday and remained lower as the day went on, partly due to the lack of a Canadian tariff reprieve announcement. By mid-day, the Dow had fallen roughly 500 points, or 1.1%, with the S&P 500 down 1.7% and the Nasdaq off by 2.2%.
These market declines follow broader volatility during Trump’s presidency, driven by uncertainty over trade policies. Since he took office, the Nasdaq has lost 6.4%, and the S&P 500 has slid more than 3%. Businesses have hesitated to hire, consumer confidence has dipped, and investors have moved funds away from stocks to safer assets like government bonds.
During his joint address to Congress on Tuesday, Trump acknowledged the unpopularity of tariffs and the potential for economic harm, including higher consumer prices at a time of already high inflation. Appealing directly to farmers, he urged patience, suggesting that any disruption would be temporary.
Significant Stakes for All Sides Mexico, China, and Canada are the three largest trading partners of the United States, collectively sending $1.4 trillion worth of goods to the U.S. last year—over 40% of all U.S. imports, according to the Commerce Department. A three-way trade war threatens to slow growth, increase prices, and result in job losses across North America.
A Pattern of Uncertainty Trump’s shifting stance on tariffs has led to widespread confusion. While he campaigned on aggressive tariffs from day one, he initially signed executive actions directing his administration to explore potential tariffs rather than imposing them outright. At a signing ceremony, he announced that 25% tariffs on Canada and Mexico would begin on February 1, only to repeatedly push back the deadline.
Tariffs on Chinese goods finally began on February 4, although at 10% rather than the 60% initially promised. At the same time, the administration removed the de minimis rule that had allowed goods under $800 to enter duty-free—then abruptly reinstated it, citing the need for further review by the Commerce Department.
Later, Trump touted the idea of “reciprocal tariffs” to match tariffs imposed by trading partners dollar-for-dollar. However, details and a firm timetable were scarce. Eventually, the administration specified April 2 as a target date, without specifying exactly which goods or countries would be affected.
Steel and aluminum tariffs are also scheduled to take effect on March 12, though they do not represent a significant increase over existing measures.
After the latest round of tariffs on Mexico and Canada took effect Tuesday, stocks tumbled. Trump, who often tracks market reactions, paused the auto tariffs for a month the following day. As of Thursday’s announcement, it appears the tariffs on Mexico under USMCA have been postponed until April 2—but whether they will indeed go into effect after that date remains uncertain.
