News / Trump suspends Mexico tariff for a month... sparing Canada too now

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Hours after exempting Mexico from punishing 25% tariffs, for a month on goods traded under an existing free trade agreement, Donald Trump has spared Canada too.

The US president’s decision to step back suggests a softening towards the neighbours after what looked set to be a fiery trade war, only five years after they signed the US Mexico Canada trade deal (UMSCA), which Mr Trump himself negotiated after years of railing against the North American Free Trade Agreement.

Writing on the social media platform he owns, the president said: “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 USMCA.

“Our relationship has been a very good one, and we are working hard, together, on the border, both in terms of stopping Illegal aliens from entering the United States and, likewise, stopping fentanyl.”

Several hours later, Mr Trump confirmed that the tariffs against Canada would also be shelved for 30 days, his decision coming on the back of a fight-fire-with-fire approach adopted by the government in Ottawa, that it would impose reciprocal tariffs on hundreds of billions of dollars of US imports.

Canada has increasingly questioned the validity of the US president’s claim that fentanyl is being trafficked across the Canada-US border, which Mr Trump has used as a justification for the crippling tariffs on the US’s major trading partners.

Following what The New Yorker described as “showily expensive efforts to bolster border defences”, Canadian prime minister Justin Trudeau claimed that less than half an ounce of the drug had been seized by the country’s officials on its border with the US.

The u-turn comes just two days after Mr Trump confirmed that Canada and Mexico would be hit with 25% tariffs, a move that sent markets into freefall and prompted the heads of US automotive majors to sit down with the administration and seek a reprieve for any shipments linked to car manufacturing.

That reprieve was confirmed by White House press secretary Karoline Leavitt on Thursday.

John Manners-Bell, CEO of Transport Intelligence, told The Loadstar it was “difficult to overstate the impact which Trump’s tariff policy pronouncements are causing on the North American auto sector”.

He added: “For decades, the industry developed on cross-border flows of components – up to two-fifths of parts in US vehicles are likely produced in Mexico, a fifth in Canada.

“For logistics and supply chain structures to function efficiently, sales, inventory, sourcing strategies, and production plans need to be predictable and long-term. All of these are being thrown into disarray by constant uncertainty, created by the on-off threat of tariffs.”