Roving Periscope: For a month, Trump delays 25% tariffs on Mexico and Canada
Virendra Pandit
New Delhi: He may not have bargained for a swift tit-for-tat from both Canada and Mexico, or the fallout in home markets for the tariffs he imposed on the countries to the north and south of the United States of America.
Amid his roller-coaster drive through geoeconomics and geopolitics since January 20, the businessman-turned-politician, President Donald Trump, on Thursday postponed for a month the 25 percent tariffs on many imports from Mexico and some imports from Canada amid widespread fears of the economic fallout from a broader trade war.
The White House claimed that its fresh tariffs are meant to stop the smuggling of fentanyl, but the taxes proposed by Trump have caused a gaping wound in the decades-old North American trade partnership. His tariff plans also caused the stock market to sink and alarmed US consumers, the media reported on Friday.
Besides his claims about fentanyl, he insisted that the tariffs could be resolved by fixing the trade deficit and he emphasised, while speaking in the Oval Office, that he still plans to impose “reciprocal” tariffs starting April 2.
“Most of the tariffs go on April the second,” Trump said before signing the orders.
“Right now, we have some temporary ones and small ones, relatively small, although it’s a lot of money having to do with Mexico and Canada.” Trump said. He was not looking to extend the exemption on the 25 percent tariff for autos for another month.
Imports from Mexico that comply with the United States-Mexico-Canada Agreement (USMCA), 2020, would be excluded from the 25 percent tariffs for a month. Auto-related imports from Canada that comply with the trade deal would also avoid the 25 percent tariffs for a month, while the potash that US farmers import from Canada would be tariffed at 10 percent, the same rate at which Trump wants to tariff Canadian energy products.
Nearly 62 percent of imports from Canada would likely still face the new tariffs because they’re not USMCA compliant, a White House official said. Half of imports from Mexico that are not USCMA compliant would also be taxed.
Mexico President Claudia Sheinbaum has planned to announce any retaliatory measures on Sunday, but Trump credited her with making progress on illegal immigration and drug smuggling as a reason for again pausing tariffs that were initially supposed to go into full effect in February.
“I did this as an accommodation, and out of respect for, President Sheinbaum,” Trump said on Truth Social. “Our relationship has been a very good one, and we are working hard, together, on the Border.”
Trump’s actions also thawed relations with Canada somewhat, after its initial retaliatory tariffs of 30 billion Canadian dollars (USD 21 billion) on US goods. The government suspended its second wave of retaliatory tariffs on additional US goods worth C$125 billion (USD 87 billion).
Major US stock markets briefly bounced off lows after Commerce Secretary Howard Lutnick previewed the month-long pauses on Thursday. Significant declines resumed within an hour. The S&P 500 stock index dropped below where it was before Trump was elected.
Asked whether the stock market decline was due to his tariffs, Trump said: “A lot of them are globalist countries and companies that won’t be doing as well because we’re taking back things that have been taken from us many years ago.”
On social media platform X, Sheinbaum said she and Trump “had an excellent and respectful call in which we agreed that our work and collaboration have yielded unprecedented results.”
In the last few weeks, Mexico has cracked down on drug cartels, sent troops to the US border and delivered 29 top cartel bosses long chased by American authorities to the Trump administration.
At a press conference, Sheinbaum elaborated on her call with Trump on Thursday, saying that she told the US President that Mexico was making great strides in fulfilling his security demands.
“I told him we’re getting results,” Sheinbaum said. But the US imposed the tariffs, so she asked Trump “how are we going to continue cooperating, collaborating with something that hurts the people of Mexico?”
She added that “practically all of the trade” between the US and Mexico will be exempt from tariffs until April 2. The two countries will continue to work together on migration and security, and to cut back on fentanyl trafficking to the US.
From January to February, the amount of fentanyl seized at the border dropped more than 41 per cent, Sheinbaum said, citing data from US Customs and Border Protection, meeting a commitment made to Trump.
However, relations between the US and Canada remain frosty because of the tariff pressures.
A senior Canadian government official said Prime Minister Justin Trudeau’s call on Wednesday with Trump became heated. The US President used ‘profanity’ while complaining about protections in Canada’s dairy industry.
Ontario Premier Doug Ford, the leader of Canada’s most populous province, said that, starting Monday, the province will charge 25 percent more for electricity shipped to 1.5 million Americans in response to Trump’s tariff plan. Ontario provides electricity to Minnesota, New York and Michigan.
“This whole thing with President Trump is a mess,” Ford said on Thursday. “This reprieve, we’ve went down this road before. He still threatens the tariffs on April 2.” Ford has said that so long as the threat of tariffs continue, Ontario’s position will not change.
