By David Goldman, CNN
President Donald Trump announced a nearly one-month tariff delay on all products from Mexico. Photo: AFP/CHIP SOMODEVILLA
President Donald Trump on Thursday announced a nearly one-month tariff delay on all products from Mexico 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.
Commerce Secretary Howard Lutnick also said on Thursday that Trump will likely announce later in the day a one-month delay on all Canadian tariffs.
"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," Trump wrote on Truth Social on Thursday, after a phone conversation with the Mexican president. He said the tariffs would be delayed until 2 April. The USMCA is the United States-Mexico-Canada Agreement, negotiated by Trump during his first term, that makes the three North American countries a free trade zone.
"I did this as an accommodation, and out of respect for, President Sheinbaum. 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," Trump added. "Thank you to President Sheinbaum for your hard work and cooperation!"
In an interview with CNBC earlier on Thursday, Lutnick said tariffs on all treaty-compliant products from Canada, most of which were hit with a 25 percent tariff on Tuesday, will probably be paused. Lutnick said they will go into effect on 2 April unless Mexico and Canada show significant progress in fighting what the Trump administration has called an epidemic of fentanyl crossing the border to the United States.
Stocks, which fell sharply to start the day on Thursday, remained lower after Trump and Lutnick's announcements but pared some of their losses. The Dow was down about 200 points, or 0.5 percent. The broader S&P 500 fell 1 percent and the tech-heavy Nasdaq was 1.4 percent lower.
The market is in the red during Trump's presidency in part because of the uncertainty the administration's trade policy has caused. The Nasdaq has fallen 6.4 percent since Trump took office, and the S&P 500 is down more than 3 percent. Businesses have paused hiring, consumer confidence has plunged and investors have shifted out of stocks and into safe havens like government bonds.
Trump in his joint address to Congress on Tuesday night acknowledged that tariffs are unpopular and could cause some pain, particularly by raising prices on an already inflation-weary American public. In one of his more vulnerable moments during the speech, Trump pleaded for patience, asking farmers who could be hurt by retaliatory tariffs to "bear with me" and said "there will be a little disturbance".
The back and forth on tariffs alone is causing confusion. Trump has routinely threatened or briefly put in place tariffs only to announce delays or pauses, leaving Corporate America unclear on how to invest and whether to hire.
Trump campaigned on steep tariffs on Day One. Instead, he signed several executive actions on his first day in office ordering his administration to investigate whether to pursue tariffs on a wide range of goods. In a signing ceremony, Trump announced that 25 percent tariffs on Canada and Mexico would be coming February 1.
But those tariffs were delayed - first by a few days and then by a month after both countries sent delegations to negotiate on illegal border crossings and fentanyl.
Promised tariffs on China went into place on 4 February - but not at the 60 percent level Trump had promised in December. The 10 percent tariffs came with a surprising twist: The elimination of the de minimis exclusion, a loophole that allows goods valued at less than US$800 to come over the border duty-free. Those packages are numerous and onerous for customs officials to scan for tariffs.
The next day, the US Postal Service stopped all package deliveries from China from entering the United States because it was unable to abide by the new trade policy. But hours later, the de minimis exclusion was back on - temporarily - until the Commerce Department could determine how to police it.
Then, Trump promised a "big one," as he called it: reciprocal tariffs - matching foreign countries' tariffs dollar for dollar. Instead, the plan, as it were, which Trump announced in the Oval Office on February 13 to much fanfare, consisted of a vaguely worded memo that offered few concrete details and no real timeframe for those tariffs to kick in. Eventually the timeframe - April 2 - became clearer, but the tariffs that would be applied and the countries that would be subjected to the reciprocal tariffs remain somewhat of a mystery. Trump has floated autos, copper, microchips, pharmaceuticals and lumber, but specifics remain sparse.
Trump also announced steel and aluminum tariffs that are set to go into place on 12 March. But they don't represent a significant increase over what was already in place.
After the latest tariffs on Mexico and Canada went into effect Tuesday, stocks fell sharply. Trump - who has long fixated on how his policies perform in the markets - and his team were paying close attention to the market on Tuesday, a source familiar with the discussions told CNN. On Wednesday, Trump paused the tariffs on autos coming from Mexico and Canada for a month.
And now today, it looks like they're all off. Until at least 2 April. Maybe.
- CNN
