Trump partially suspends tariffs against Mexico and Canada

US President Donald Trump has backtracked somewhat in the trade conflict with Canada and Mexico. The Republican partially suspended tariffs on goods from the two neighboring countries - at least for the time being.

All imports from Mexico and Canada that fall under the North American Free Trade Agreement (USMCA) will therefore not be subject to punitive tariffs until April 2. This affects Canada and Mexico to varying degrees.

The USMCA (United States-Mexico-Canada Agreement) is a free trade agreement that the three countries signed during Trump's first term in office (2017 to 2021). However, after the start of his second term, the US president directly clashed with his neighbors on trade policy.

Tariffs on US imports from Canada and Mexico came into force on Tuesday night (local time). Trump justified the 25 percent punitive tariffs by saying, among other things, that the two countries were not doing enough to combat cross-border drug trafficking. Punitive tariffs of 10 percent were introduced on energy imports from Canada.

Trump's salami tactics

An import tariff is a tax that is levied at the border on goods imported from abroad. It is usually paid by the importing company. Experts consider tariffs to be a risky strategy for resolving a trade conflict because they primarily increase consumer prices and thus affect ordinary citizens the most. The US's tariff disputes with important trading partners also caused a bad mood on the stock markets and falling share prices. Trump usually keeps a particularly close eye on the latter.

The US President eventually backtracked. On Wednesday he granted a one-month reprieve for US car manufacturers producing abroad. The White House announced that an exception would apply until the beginning of April for all cars that come to the US from Mexico or Canada via the USMCA free trade agreement.

On Thursday, he then announced the broader exemption for Mexico - and later also for Canada - according to which all goods from both countries that fall under the USMCA agreement will remain duty-free until the beginning of April. The consequences for the neighbors are different: According to the White House, around 50 percent of imports from Mexico are covered by the agreement, but only 38 percent of goods from Canada.

Different tones towards Mexico and Canada

Trump wrote on the online platform Truth Social that he had spoken to Mexican President Claudia Sheinbaum on the phone and granted the delay out of "respect and goodwill." The relationship with Mexico is good. They are now working together to prevent migrants from illegally crossing the border into the US and to stop the smuggling of the chemical drug fentanyl. Sheinbaum thanked Trump on Platform X for an "excellent and respectful conversation."

Trump, on the other hand, had less favorable words for Canadian Prime Minister Justin Trudeau. And Trudeau, too - before Trump's partial backtracking - was still pessimistic and said he expected the trade conflict to continue "for the foreseeable future." His phone call with Trump was "colorful" and contained moments of tension, he reported. According to a source in the Wall Street Journal, there were even insults between the two. Canada responded to the US tariffs directly with counter-tariffs - and has stuck to that so far.

A lot of back and forth

It is not the first twist in the tussle that Trump started with his neighbors immediately after taking office. The US president had actually wanted to introduce the punitive tariffs on goods from the two countries at the beginning of February. But just a few hours before the threatened punitive tariffs on goods from Canada and Mexico were originally supposed to take effect, Trump agreed to concessions, especially on border security. In return, he initially postponed the trade restrictions for 30 days. After the deadline had passed, however, he finally got serious about the tariffs.

Other trade battles continue

Trump regularly uses tariff threats as a negotiating tactic to force concessions in other areas. This was already the case in his first term in office. And since his swearing-in in January, he has also started trade disputes with more than just Canada and Mexico. Trump also imposed new tariffs on imports from China - initially at a rate of ten percent, and in a second step he doubled them to 20 percent.

Europeans must also expect tariffs from the new US government. Trump has already made such a threat several times, but without giving any details. The Republican generally plans to introduce reciprocal tariffs on a large scale - that is, to raise import duties wherever the US currently charges less than its trading partners.(DPA)

This article originally appeared on FashionUnited.DE. It was translated to English using AI.

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