In an important change in policy, President Donald Trump of the United States has authorized directives to broaden the exclusions for tariffs that were recently placed on Canadian and Mexican products. This move represents a major reversal from actions that had raised concerns among industries and financial markets. The exclusions, impacting crucial areas of commerce between the U.S. and its top two trading allies, have been issued mere days after the tariffs came into effect.
In a significant policy shift, U.S. President Donald Trump has signed orders to expand exemptions for tariffs recently imposed on goods from Canada and Mexico. This decision marks a notable retreat from measures that had caused alarm among businesses and financial markets. The exemptions, affecting key sectors of trade between the U.S. and its two largest trading partners, come just days after the tariffs were implemented.
Canadian Prime Minister Justin Trudeau characterized his recent phone call with Trump as “intense,” with sources indicating that the U.S. president was forceful in his rhetoric during their discussion. Even with certain compromises, Trudeau recognized that an extensive trade dispute between the two countries is still probable. “Our end goal is the elimination of all tariffs,” Trudeau informed journalists, emphasizing the persistent frictions.
In contrast, Sheinbaum described her conversations with Trump as “constructive and courteous,” highlighting the mutual dedication between Mexico and the U.S. to tackle urgent challenges such as the smuggling of fentanyl and weapons across their borders. The provisional exceptions pertain to products exchanged under the United States-Mexico-Canada Agreement (USMCA), a free trade deal enacted during Trump’s initial term. Items encompassed by this agreement include televisions, air conditioners, avocados, beef, and more.
Besides excluding specific products, the updated policies lower the tariffs on potash, a crucial component in fertilizer, from 25% to 10%. Nonetheless, a White House representative explained that a large segment of imports—roughly 50% of items from Mexico and 62% from Canada—continue to face tariffs. These numbers might change as companies adjust to the changing trade regulations.
In addition to exempting certain goods, the new measures reduce tariffs on potash, an essential fertilizer ingredient, from 25% to 10%. However, a White House official clarified that a significant portion of imports—approximately 50% of goods from Mexico and 62% from Canada—are still subject to tariffs. These figures could shift as businesses adapt to the evolving trade policies.
Despite the partial relief, the White House remains committed to its broader tariff strategy. Officials have announced plans to introduce new “reciprocal” trade duties targeting other countries starting April 2. This approach has sparked concern among businesses and economists, who warn that such policies could lead to rising consumer prices in the U.S. and economic instability in Canada and Mexico.
While signing the exemptions, Trump rejected claims that the policy changes were intended to soothe market fluctuations. “This has nothing to do with the market,” he stated. “I’m not even paying attention to the market because, in the long run, our actions will significantly strengthen the United States.”
During the signing of the exemptions, Trump dismissed suggestions that the policy adjustments were aimed at calming market volatility. “This has nothing to do with the market,” he said. “I’m not even looking at the market because, long term, what we’re doing will make the United States much stronger.”
Treasury Secretary Scott Bessent offered his perspective on the trade conflicts, criticizing Trudeau’s approach to the issue. While addressing the Economic Club of New York, Bessent dismissed Canada’s retaliatory measures as ineffective, asserting, “If you want to behave foolishly and escalate this matter, tariffs will only rise.”
Treasury Secretary Scott Bessent also weighed in on the trade tensions, criticizing Trudeau’s handling of the situation. Speaking at the Economic Club of New York, Bessent dismissed Canadian retaliation as counterproductive, stating, “If you want to act like a numbskull and escalate this, tariffs are only going to increase.”
The deep economic integration between the U.S., Canada, and Mexico has made the impact of the tariffs particularly significant. Trade worth billions of dollars crosses the borders of the three countries daily, facilitated by decades of free trade agreements. Experts warn that any disruptions to this flow could have far-reaching consequences for businesses and consumers alike.
Daniel Anthony, president of Trade Partnership Worldwide, noted that the exemptions under the USMCA could potentially save importers millions of dollars but added that it’s unclear how many businesses will be able to take advantage of the carveouts. “There’s a lot of money at stake, but whether companies can adapt quickly enough to claim USMCA benefits remains to be seen,” he said.
The U.S. economy is already beginning to feel the effects of the trade policies. According to the Commerce Department, January saw a 34% increase in the trade deficit, which now exceeds $130 billion, as businesses rushed to import goods ahead of the tariffs. Gregory Brown, CEO of BenLee, a company specializing in manufacturing trailers, said Trump’s policies have forced him to adjust prices multiple times in recent weeks. However, he noted that his customers have so far been willing to absorb the higher costs, reflecting the strength of the current economy.
Brown, who attended Bessent’s speech in New York, praised Trump for showing flexibility by expanding the exemptions, describing the move as a pragmatic response to business realities. “He’s listening to the needs of the economy and making adjustments,” Brown said.
As tensions between the U.S., Canada, and Mexico continue to simmer, the long-term implications of Trump’s tariff policies remain uncertain. While some sectors may benefit from the exemptions, others are likely to face ongoing challenges as the trade landscape evolves. For now, business leaders and policymakers will be watching closely as the April 2 deadline for new tariff measures approaches.
