US delays tariffs on Mexico and Canada until April 2

Washington: US President Donald Trump has signed executive actions that delay for nearly one month tariffs on all products from Mexico and Canada that are covered by the USMCA free trade treaty, a significant walkback of the administration's signature economic plan that has rattled markets, businesses, and consumers.

President Trump's executive actions came after discussion with Mexican President Claudia Sheinbaum on Thursday and negotiations between Canadian officials and the Trump administration.

He said the tariffs would be delayed until April 2.

The United States-Mexico-Canada Agreement (USMCA) is a free trade agreement creating a free trade zone among the US, Mexico, and Canada negotiated by Trump, which replaced NAFTA.

Both leaders expressed appreciation for their collaborative efforts to address border issues.

"Practically all the trade we have with the United States is within the Mexico, United States, Canada Agreement. There is a part that has to do with rules of origin, but everything is practically within the trade agreement," Sheinbaum said.

A White House official clarified that while 50% of imports from Mexico and 36% from Canada fall under the USMCA, many items like avocados aren't covered due to high compliance costs. Interestingly, these non-compliant items have been treated as if they were compliant at customs, avoiding tariffs. The official suggested producers could register for USMCA compliance to avoid a 25% tariff, but details on affected products are pending from the US Trade Representative.

Trump announced a one-month delay on tariffs for autos, giving automakers time to shift production to the US. However, this is unlikely to happen due to the significant undertaking required.

Energy from Canada isn't included in the USMCA, so a 10% tariff will remain, potentially increasing gas prices in the Northeast US. On the other hand, tariffs on Canadian potash were temporarily reduced from 25% to 10% to support farmers.

Trump has praised Mexican President Claudia Sheinbaum, who reported a significant drop in fentanyl seizures at the US-Mexico border in February. As a result, she won't implement retaliatory measures against US tariffs. In contrast, Trump has criticised Canadian Prime Minister Justin Trudeau, accusing him of politicising tariff concerns. Trump initially granted Mexico a reprieve from tariffs, later extending it to Canada.

Trudeau stated that his country's retaliatory measures will remain in place unless the US completely lifts its tariffs. Ontario Premier Doug Ford announced a 25% tariff on electricity exports to 1.5 million American homes.

The tariff dispute has created confusion, particularly among US businesses. Trump's unpredictable approach to tariffs has left companies uncertain about investment and hiring decisions.

Trump's tariff plans have been unpredictable. After campaigning on imposing steep tariffs, he delayed them multiple times. Initially set for February 1, tariffs on Canada and Mexico were postponed after negotiations on border crossings and fentanyl. US Commerce Secretary Howard Lutnick now suggests more one-month tariff exemptions under USMCA are likely.

Trump's latest announcement on Mexico tariffs came after White House Press Secretary Karoline Leavitt announced a one-month exemption for three major automakers from the 25% tariffs on Mexico and Canada. This development follows Trump's executive order on February 1, imposing a 25% tariff on imports from Mexico and Canada, with a 10% increase on Canadian energy products.

Initially, there was a 30-day delay in implementing the tariffs, but they took effect on March 4.

Businesses are increasingly concerned about the rising costs due to these tariffs, which could drive up consumer prices and contribute to an economic slowdown. The stock market has shown significant volatility.

Trump has yet to announce a pause on Canada tariffs.

(inputs from IANS)