On Thursday, U.S. President Donald Trump announced that Mexico would be temporarily exempt from tariffs on goods covered by the United States-Mexico-Canada Agreement (USMCA). The exemption will last until April 2, following a conversation with Mexican President Claudia Sheinbaum.
“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 posted on Truth Social. “This Agreement is until April 2nd.”
This announcement follows Trump’s decision earlier in the week to impose a 25% tariff on goods imported from both Mexico and Canada. However, the exemption granted to Mexico raises questions about the fate of Canadian imports under this new trade policy.
Was Canada Supposed to Be Exempt Too?
Earlier on Thursday, U.S. Commerce Secretary Howard Lutnick suggested that Canada would likely receive the same tariff exemption as Mexico. Speaking to CNBC, Lutnick indicated that the one-month reprieve granted to automotive products might be expanded to all USMCA-compliant goods from both Mexico and Canada.
“It’s likely that it will cover all USMCA-compliant goods and services,” Lutnick said, emphasizing that Trump was expected to confirm the extension later that day.
However, when Trump made his announcement, Canada was notably absent from the list of exempted nations. This omission has led to uncertainty regarding Canada’s trade status under the USMCA.
What Has Been Canada’s Response?
Canadian Prime Minister Justin Trudeau responded to Lutnick’s remarks with cautious optimism. “That aligns with some of the conversations that we have been having with administration officials, but I’m going to wait for an official agreement to talk about Canada’s response and look at the details of it,” Trudeau told reporters in Canada. He acknowledged that while the possibility of an exemption was promising, “the tariffs remain in place, and therefore our response will remain in place.”
This suggests that Canada may still face retaliatory tariffs unless an official exemption is granted by the U.S. administration.
Why Did Trump Exempt Mexico First?
The exemption for Mexico came after a direct conversation between Trump and Sheinbaum. The Mexican president shared the news on her social media, emphasizing that the agreement was the result of a “respectful and productive” discussion with Trump. She highlighted the importance of continued cooperation between the two nations, particularly in addressing issues like migration and security.
“We will continue working together, particularly on migration and security matters, including reducing illegal fentanyl trafficking into the United States, as well as arms trafficking into Mexico,” Sheinbaum stated.
Trump has repeatedly linked trade policies to national security concerns, particularly regarding fentanyl trafficking. Lutnick also noted that the decision to grant a temporary exemption is part of an effort to combat fentanyl-related deaths in the U.S.
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What Happens on April 2?
Despite the current exemption, both Mexico and Canada could face tariffs again after April 2. Lutnick warned that the administration plans to move forward with a reciprocal tariff system, where the U.S. will impose levies that match those imposed by its trading partners.
This raises questions about what negotiations might take place before the deadline and whether Canada will be granted an exemption similar to Mexico’s before April 2 arrives.
Will Canada Receive an Exemption?
At this point, it remains unclear whether Canada will receive the same tariff relief as Mexico. Lutnick initially predicted that both nations would be covered, but Trump’s official announcement left Canada out of the equation.
With Trudeau signaling a continued response to U.S. tariffs, Canada may push for an official exemption in the coming weeks. Meanwhile, businesses and policymakers in both countries will be closely watching the developments leading up to the April 2 deadline, as they prepare for potential economic consequences.
