President Trump said on Thursday that he would allow both Mexico and Canada to avoid tariffs on most exports to the United States for one month, saying he would exempt products that are traded under the rules of the U.S.-Mexico-Canada Agreement, the trade pact he signed in his first term.
The move came a day after he granted a 30-day reprieve to automakers, who had complained to the president that his sweeping 25 percent tariffs would cause severe damage to U.S. carmakers.
Mr. Trump has played an intense game of brinkmanship with the North American economy this week, as he levied stiff tariffs on Canada and Mexico, before gradually rolling some of them back. The approach has sent stock markets tumbling and sowed anxiety and confusion among industries that depend on trade with Canada and Mexico, which account for more than a quarter of U.S. imports and nearly a third of U.S. exports.
On Thursday, Mr. Trump signed executive orders authorizing the pause.
Mr. Trump had announced his decision regarding Mexico earlier in the day in a post on Truth Social. But he had not made a similar announcement about Canada, leaving investors, economists and Canadians wondering whether America’s Northern neighbor would still face the levies.
“I can confirm that we will continue to be in a trade war that was launched by the United States for the foreseeable future,” Prime Minister Justin Trudeau of Canada said after Mr. Trump said he would temporarily exempt Mexico.
“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 the USMCA Agreement,” Mr. Trump wrote on social media.
“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,” he added.
Ms. Sheinbaum posted “many thanks” to Mr. Trump on social media on Thursday, saying “we had an excellent and respectful call in which we agreed that our work and collaboration have yielded unprecedented results.”
The decision to pause the tariffs came after more volatility in U.S. stock markets, which fell in morning trading amid concern about economic fallout from the levies.
While stocks initially nudged higher after Mr. Trump’s commerce secretary, Howard Lutnick, said the president would most likely exempt all products that trade under U.S.M.C.A., that stabilization did not last. The S&P 500 fell further after Mr. Trump announced his decision about Mexico, down nearly 2 percent for the day, suggesting that investors were not mollified by the temporary reprieve.
Not all imports will be free from the tariffs. About 10 percent of Mexico’s exports to the United States fall outside the U.S.M.C.A. trade agreement, according to William Jackson, the chief emerging markets economist for Capital Economics. That includes some automobiles and machinery exports, he said.
“In both cases this is because producers have found it burdensome to comply with regional content requirements needed for tariff-free trade,” Mr. Jackson said. BMW, for example, imports some vehicles from a factory in San Luis Potosí, Mexico, for which it pays a tariff, rather than using the terms of U.S.M.C.A.
The pause will do little to blunt the overall economic pain that Mr. Trump plans to inflict with tariffs. The president has said he will impose 25 percent tariffs on all steel and aluminum as of March 12 and that on April 2 he will announce tariffs on auto imports as well as “reciprocal” tariffs. Those levies will raise U.S. tariffs to match the levels set by other countries, while also taking into consideration other practices that affect trade, like taxes and currency.
Mr. Trump’s economic advisers have argued that the tariffs will not fuel inflation, however, Treasury Secretary Scott Bessent acknowledged on Thursday that there could be a temporary uptick in prices.
“Can tariffs be a one-time price adjustment? Yes,” Mr. Bessent said at the Economic Club of New York.
But Mr. Bessent said that as part Mr. Trump’s broader economic agenda, which includes increasing energy production and rolling back regulations, he was not concerned about trade policies leading to higher prices.
“Across a continuum, I’m not worried about inflation,” Mr. Bessent said.
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