President announces temporary waiver after week of chaos
Donald Trump has pulled back on 25% tariffs on most Canadian and Mexican imports, granting another temporary pause until April 2 after a chaotic week that’s roiled global financial markets and wreaked havoc on cross-border trade.
Trump said on Thursday that Mexico “will not be required to pay Tariffs on anything” covered under the existing USMCA (US-Mexico-Canada) trade deal, later signing an executive order to extend the same decision to Canadian imports.
The move came after Trump spoke by phone with Mexico’s president Claudia Sheinbaum on Thursday. US negotiators have also been in deep discussion with Canadian counterparts since Tuesday, and Trump – despite repeatedly taunting Canadian prime minister Justin Trudeau on his Truth Social platform – spoke with Trudeau yesterday.
Trump’s decision follows his move yesterday to grant a temporary reprieve for certain automakers to the punishing tariffs, which came into effect on Tuesday and saw all Canadian imports crossing the border slapped with a 25% levy, with the exception of Canadian energy and minerals which were charged at 10%.
While Canadian officials had reportedly insisted on the removal of all US tariffs before they withdrew their own countermeasures, the Globe and Mail said an unnamed senior official communicated that Canada would likely delay its retaliatory measures after reading the president’s executive order.
Stock markets had plunged in the days following the beginning of Trump’s trade war. The S&P plummeted to its lowest level since the beginning of November while 500 points were wiped off the Dow Jones, and 10-year Government of Canada bond yields – which lead fixed mortgage rates in Canada – also nosedived.
Critics said the tariffs would stoke inflationary pressures in the US and spike prices for American consumers, including the cost of building and buying a home, although Trump claimed in his address to a joint session of Congress on Tuesday that they would help the US economy flourish after “a little bit of an adjustment period.”
But while Thursday’s news once again postpones the prospect of a punishing trade war, few in Canada are likely to break out the champagne.
Trump’s decision to push ahead with the tariffs on Tuesday arrived after an initial delay at the beginning of February, when he postponed the measures for 30 days following last-minute talks with Trudeau.
And yesterday, Canada’s foreign minister Mélanie Joly lambasted the “unpredictability and chaos” coming out of the White House. “It’s not true that we will go through this psychodrama every 30 days,” she commented.
If Ottawa lifts its own measures in response to Trump’s move, talks between the two governments are likely to continue in the weeks leading up to the next wave of tariffs in early April.
Trudeau is set to step aside as prime minister at the conclusion of the Liberal Party leadership race next week, with former Bank of Canada and Bank of England governor Mark Carney and former federal finance minister Chrystia Freeland among the leading contenders to take his place.
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