Two days after imposing sweeping tariffs on Canada and Mexico, President Trump on Thursday abruptly suspended many of those levies, sowing confusion with investors and businesses that depend on trade with the countries.
The president said he would allow products that are traded under the rules of the U.S.-Mexico-Canada Agreement, the trade pact he signed in his first term, to avoid the stiff 25 percent tariffs he imposed just days ago on two of America’s largest trading partners.
The suspension effectively abandons many of the tariffs that Mr. Trump had placed on Canadian and Mexican products — levies he said were necessary to stem the flow of drugs and migrants into the United States.
His decision came a day after he said he would grant a 30-day reprieve to automakers, who had complained to the president that the levies would cause severe damage to U.S. carmakers. Mr. Trump implied that any relief would be short-lived, saying that other tariffs on Canadian and Mexican products are coming in April.
Mr. Trump’s chaotic, stop-and-start approach has sent stock markets tumbling and generated anxiety 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. After Mr. Trump imposed his tariffs, Canada retaliated with levies on $20.5 billion worth of American goods, including agricultural products, and Mexico was threatening to impose its own import taxes on U.S. goods on Sunday if Mr. Trump did not relent.
Still, the decision to suspend the tariffs did little to calm financial markets, which have been jittery since Mr. Trump ratcheted up his trade war earlier this week. In addition to hitting Canada and Mexico, Mr. Trump placed a second 10 percent tariff on all Chinese imports, prompting another round of retaliation from Beijing on American products. The president has not suspended any of his levies on China.
The S&P 500 tumbled 1.8 percent on Thursday, taking the slide for the index this week to 3.6 percent and putting it on course for its worst week since a banking crisis two years ago that felled some of the country’s small lenders.
Speaking from the White House on Thursday, Mr. Trump said his decision would protect American carmakers and farmers. He insisted that there were “no delays at all” and his order had “nothing to do with the market.”
“I’m not even looking at the market, because long term, the United States will be very strong with what’s happening here,” he said. “Now these are countries and companies, foreign companies, that have been ripping us off, and no president did anything about it, until I came along.”
The president said earlier in a post on social media that, after speaking with Mexico’s president, he was suspending tariffs on many imports from the country until April 2, when he would launch into a separate round of trade actions.
“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,” he 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.”
Later in the day, Mr. Trump also announced that his suspension would cover certain imports from Canada.
Dominic LeBlanc, Canada’s finance minister, said that after Mr. Trump’s suspension, Canada is suspending plans to impose a second round of retaliatory tariffs.
But Doug Ford, the premier of Ontario, the most populous province, dismissed the suspension. “This whole thing with President Trump is a mess,” Mr. Ford told reporters. “We went down this road before. He still threatens the tariffs on April 2.”
Peter Navarro, the senior counselor for trade and manufacturing, told reporters in a call Thursday that the tariffs were about stopping deaths from fentanyl. “What America needs now is a solemn commitment from China, Canada and Mexico to stop killing Americans and to take actions that will immediately stop the fentanyl carnage,” he said.
Canada and Mexico have responded to Mr. Trump’s tariffs with various measures to strengthen border security, and U.S. statistics show that Canada is responsible for just a tiny percentage of the fentanyl coming into the United States. Real-time, national data on fentanyl overdose deaths — another metric frequently cited by Trump officials — does not appear to exist.
Not all imports will be free from the tariffs. A White House official who briefed reporters but was not authorized to speak publicly said that 38 percent of imports from Canada used U.S.M.C.A. preferences last year, as did about half of Mexican imports. The official said that oil imported from Canada typically did not, and so would face a 10 percent tariff.
Economists have come up with different numbers for how many goods the tariff suspension could affect. According to calculations by the Peterson Institute for International Economics, about 15 percent of U.S. merchandise imports from Canada and Mexico may not be eligible for preferential tariffs under U.S.M.C.A.
William Jackson, the chief emerging markets economist for Capital Economics, said that about 10 percent of Mexico’s exports to the United States fall outside the U.S.M.C.A. trade agreement. 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 White House official said the suspension had been instigated by U.S. automakers, who argued in a call with the president on Tuesday that putting tariffs on cars and parts from Canada and Mexico would impose billions of dollars of new costs on them and effectively erase all of their companies’ profits.
Many other trade groups had raised similar complaints about the tariffs, including farmers who depend on imports of Canadian fertilizer and export their products to Canada and Mexico.
The executive order said that potash, a fertilizer from Canada that U.S. farmers depend on, would be charged a 10 percent levy instead of 25 percent.
“We don’t need trees from Canada,” Mr. Trump said Thursday. “We don’t need cars from Canada. We don’t need energy from Canada.”
“So where we can be self-sustaining, which is in most things, if we have more oil and gas than anybody — our forests are massive, massive forests,” he continued. “We’re just not allowed to use it because of the environmental lunatics that stopped us.”
The suspension in the tariffs may do little to blunt the overall economic pain that Mr. Trump’s levies would inflict. 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 of 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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