About half of goods from Mexico and more than one-third from Canada won’t face the 25% tariff on imports from the two countries that Trump ordered Tuesday.
President Donald Trump issued exemptions on tariffs for a variety of goods coming into the United States from Mexico and Canada — just two days after he put the sweeping tariffs in place — leaving investors and businesses grappling with the whiplash of his back-and-forth trade policy.
The exemptions to the 25% tariffs enacted Tuesday would apply to about half of goods coming into the United States from Mexico and around 38% of goods from Canada that comply with the North American trade deal reached during Trump’s first term, according to a senior administration official.
It’s the second time in less than two months that Trump has announced and then backtracked on tariffs on the United States’ neighbors. The moves have rattled the stock market, with businesses warning that the added costs could drive prices higher and cut into their profits. The Dow Jones Industrial Average and the S&P 500 are on pace for their worst week since September.
“The can keeps getting pushed, kicked down the road, and we don’t know what that means,” said Chuck Dardas, president of AlphaUSA, an auto parts manufacturer in Livonia, Michigan. He later added: “To make investments and to do things we need to do, we need some certainty. Not that we can have perfect certainty — but not be on a constant diet of, well, we’ll wait till next month to see if the ax is going to fall.”
“The only thing, I guess, to be certain is that we’ve got 30 more days to worry about it,” Dardas said.
The exemptions Trump issued Thursday will last until April 2, when Trump plans another round of retaliatory tariffs on goods from a range of countries. The exemptions apply to some things like potash, which is used in fertilizers, but some Canadian energy products won’t qualify and will be subjected to a 10% tariff. And all other goods, including computers from Mexico, will be subjected to the 25% tariff, the senior administration official said.
The U.S.-Mexico-Canada Agreement (USMCA), which Trump heralded during his first term as a negotiating victory, allows goods to move among the three countries tariff-free if they follow certain rules. The rules require that a product be made entirely in North America or be substantially transformed in North America if it is made of components from other countries. For products like autos, 75% of the content must be from North America.
The tariffs for non-USMCA-compliant goods could address concerns past and current U.S. officials have raised about Chinese goods’ being shipped into Mexico and then sent to the United States tariff-free, without having met the USMCA requirement of having been substantially transformed in North America.
On Tuesday, the Trump administration began charging U.S.-based companies importing goods from Canada and Mexico a 25% tariff for bringing those goods into the country. Trump also increased the tariff on goods from China to 20%, on top of tariffs already in place from his first term.
Target, Best Buy and other companies warned the added costs from the tariffs could drive prices higher on thousands of products, including alcohol, fresh produce, cars and electronics.
Recommended Article
“Tariffs hit families where it hurts: groceries, school supplies and apparel. This continuous tariff uncertainty increases pocketbook anxiety for families and also throws a wrench into future business planning and investment,” said Michael Hanson, executive vice president of public affairs for the Retail Industry Leaders Association.
A day after the tariffs went into effect, the White House said it would begin exempting autos if the companies complied by standards in the USMCA deal, which automakers said they have been doing. The tariffs could have added $4,000 to $10,000 to the cost of cars made in North America, according to estimates from Anderson Economic Group.
In announcing them, Trump said he was using the tariffs as a tool to pressure Canada and Mexico to do more to stop the flow of fentanyl into the United States, though less than 1% of fentanyl seized at the U.S. border was coming from Canada. The United States recorded 87,000 drug overdose deaths from October 2023 to September 2024, a decrease from 114,000 the previous year, according to preliminary data from the Centers for Disease Control and Prevention.
Trump said he decided to issue the exemptions after he spoke with U.S. automakers’ CEOs on Wednesday, giving them some time to adjust before he puts wider tariffs in place next month.
“There will always be a little short-term interruption. I don’t think it’s going to be big, but the countries and companies that have been ripping us aren’t particularly happy with what I’m doing,” Trump told reporters Thursday. “But the United States will be very happy. And, you know, our farmers are going to be very happy, and again, there’ll be disruption.”
Mexican President Claudia Sheinbaum said at a news conference Thursday that, in her call with Trump, she cited a graph from U.S. Customs and Border Protection showing a drop in fentanyl seizures, which she said Trump hadn’t previously seen.
“In February alone, the reduction in fentanyl seizures on the United States side of the border with Mexico was reduced by 41.5%. He didn’t know about this graph until I sent it to him,” she said.
Trump also spoke Wednesday with Canadian Prime Minister Justin Trudeau, who said earlier in the week that there had been a 97% drop in fentanyl seizures from January compared with December, with less than half an ounce seized in January.
