President Trump announced today on Truth Social that all tariffs on so-called USMCA goods from Mexico will be lifted until April 2. Following the tariff update, currency pairs USDMXN and USDCAD are down approximately 0.4%, strengthening against the US dollar.
- The actions of the administration and Trump himself reassure markets that tariffs are more of a negotiation tool for the United States in the region, rather than a permanent policy measure that could push the economies of Mexico and Canada into recession.
- The president made this decision after meeting with Mexico’s President Claudia Sheinbaum. As he stated in his post, the suspension applies to all goods covered under the USMCA agreement, including agricultural products, industrial goods, automobiles, and auto parts.
- According to Commerce Secretary Howard Lutnick, approximately 50% of products from Canada and Mexico comply with USMCA standards. Mexico's President Sheinbaum said that practically all the trade Mexico have with the US is under USMCA agreement
. However, it remains unclear whether the tariff exemption for USMCA goods (the joint agreement between Mexico, Canada, and the U.S.) will also include Canada, as Trump's statement referred exclusively to Mexico. - Given Trump's rhetoric and the dynamic nature of his decisions, it is possible that Canada will also be granted a temporary tariff exemption during ongoing discussions. So far, it is known that the president has offered Canada an exemption for vehicles that meet USMCA standards, and administration officials have hinted at the potential reduction of tariffs on certain agricultural products.
- Commerce Secretary Howard Lutnick was the first to report that President Trump was likely to delay the imposition of a 25% tariff on Mexico (and possibly Canada) on all goods and services covered under the USMCA trade agreement.
- The tariff suspension will last until April 2. After that, Trump intends to introduce new tariffs, including “reciprocal” duties on other countries and sector-specific levies targeting industries such as automotive, pharmaceuticals, and semiconductors.
- Trump criticized Canadian Prime Minister Justin Trudeau, accusing him of using the tariff issue as a political tool to seek re-election. Lutnick also stated that the US Sovereign Fund, announced by Trump, would not be financed by tariff revenues.
- Lutnick expects that starting April 2, the initial reciprocal tariff rates will be high but will gradually decrease. He also stated that by April 2, Mexico and Canada will have done enough to address the fentanyl crisis for that issue to be considered resolved, allowing negotiations to focus solely on reciprocal tariffs.
Justin Trudeau stated that Canada is engaged in discussions aimed at securing the complete removal of tariffs. However, until the matter is resolved, he remains prepared to engage in a trade war with the United States.
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Source: xStation5
Source: xStation5
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