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U.S. President Donald Trump has signed orders expanding the list of goods exempt from his newly imposed tariffs on Canada and Mexico, marking the second rollback in as many days. The latest move comes after business uncertainty and financial market concerns mounted over the escalating trade tensions.
On Wednesday, Trump announced a temporary exemption for carmakers from 25% import levies, just a day after the tariffs took effect. The decision was welcomed by Mexican President Claudia Sheinbaum, who expressed gratitude to Trump. Canada’s finance minister also acknowledged the development, stating that Canada would hold off on a planned second round of retaliatory tariffs against U.S. products.
Canadian Prime Minister Justin Trudeau described a phone conversation with Trump about the tariffs as “colourful.” Reports from U.S. and Canadian media indicate that the discussion grew heated, with Trump using profane language multiple times. Despite this, Trudeau acknowledged the exemptions as a step forward but warned that a trade war between the two allies remained likely.
“Our goal remains to get these tariffs, all tariffs removed,” Trudeau told reporters.
Sheinbaum, meanwhile, characterized her call with Trump as “excellent and respectful.” She highlighted a commitment between the two countries to curb the trafficking of fentanyl from Mexico to the U.S. and the illegal flow of firearms into Mexico.
The exemptions apply to goods traded under the U.S.-Mexico-Canada Agreement (USMCA), a pact Trump signed during his first term. Among the affected items are televisions, air conditioners, avocados, and beef, according to Trade Partnership Worldwide. The measures also lowered tariffs on potash—a key fertilizer component for U.S. farmers—from 25% to 10%.
Despite these carveouts, a White House official estimated that 50% of U.S. imports from Mexico and 62% from Canada could still face tariffs, though those numbers may shift as businesses adjust their trade practices.
The Trump administration has continued to push forward with broader tariff policies. Officials have promised additional measures set to be announced on April 2, targeting other countries with “reciprocal” trade duties. The ongoing uncertainty has unsettled financial markets, with the S&P 500 index closing nearly 1.8% lower on Thursday.
George Godber, a fund manager at Polar Capital, criticized the back-and-forth approach to tariffs, calling it a “hokey cokey” that makes it “nigh on impossible” for firms to manage supply chains. He also noted that while the uncertainty has pressured the U.S. economy, European markets—particularly Germany—have responded more favorably.
Trump, however, dismissed concerns that his policy adjustments were influenced by market reactions.
“Nothing to do with the market,” he said. “I’m not even looking at the market, because long term, the United States will be very strong with what’s happening.”
Ontario Premier Doug Ford was less optimistic, stating that the partial exemptions “mean nothing.” Prior to the announcement, Ford had warned that Canada would move forward with a 25% tariff on electricity exports to U.S. states, including New York, Michigan, and Minnesota.
“Honestly, it really bothers me. We have to do this, but I don’t want to do this,” Ford said.
Meanwhile, U.S. Treasury Secretary Scott Bessent downplayed the effectiveness of retaliatory tariffs, taking a swipe at Trudeau.
“If you want to be a numbskull like Justin Trudeau and say, ‘Oh, we’re going to do this,’ then tariffs are probably going to go up,” Bessent said during a speech at the Economic Club of New York.
Each day, goods worth billions of dollars cross the borders of the U.S., Canada, and Mexico, reflecting decades of economic integration. Trump has justified his tariff strategy as a means to protect American industry and spur domestic manufacturing. However, many economists warn that tariffs could drive up consumer prices in the U.S. and lead to economic downturns in Canada and Mexico.
Trade Partnership Worldwide estimates that about $1 billion in trade enters the U.S. daily from Canada and Mexico without claiming duty-free exemptions under USMCA, largely due to historically low tariffs. The extent to which importers will shift to claiming USMCA benefits remains uncertain, said Daniel Anthony, the firm’s president.
The U.S. economy is already showing signs of strain from Trump’s trade policies. In January, the Commerce Department reported a 34% surge in the trade deficit, reaching over $130 billion, as businesses rushed to import goods ahead of tariff hikes.
Gregory Brown, CEO of trailer manufacturer BenLee, noted that he has had to adjust pricing multiple times in recent weeks to account for the tariff changes. However, he said his customers are still willing to pay the higher costs, suggesting that economic demand remains strong.
“It’s a great growth economy,” Brown said, adding that he saw Trump’s tariff adjustments as a sign of a business-friendly president responding to economic realities.
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