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Trump changes course and delays tariffs on Mexico, but they remain in place for Canada
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Trump Speech
Secretary of Commerce Howard Lutnick speaks with reporters after President Donald Trump addressed a joint session of Congress at the Capitol in Washington, Tuesday, March 4, 2025. (AP Photo/Ben Curtis)
CHRISTOPHER RUGABER
5 min read
WASHINGTON (AP) — President Donald Trump on Thursday postponed 25% tariffs on most goods from Mexico for a month amid widespread fears of the economic fallout from a broader trade war.
Trump's announcement comes after his Commerce Secretary, Howard Lutnick, said earlier Thursday that tariffs on both Canada and Mexico would “likely" be delayed. No change was announced regarding new tariffs imposed on Canada, another major trading partner.
It is the second time Trump has postponed tariffs since he first unveiled the import taxes in early February. The reprieve would apply to goods from Mexico that are compliant with the trade agreement Trump negotiated with Canada and Mexico in his first term— which will likely cover the vast majority of imports.
“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 said on Truth Social. “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.”
No details were released Thursday as to what led to the temporary lifting of tariffs on Mexico, but not Canada.
Trudeau on Thursday said Lutnick's comments were a “promising sign,” but it also “means that the tariffs remain in place and therefore our response will remain in place.” He also indicated that he expects his country will be in a trade war with the United States for the foreseeable future.
Trump’s on-again, off-again tariffs threats have roiled financial markets, lowered consumer confidence, and enveloped many businesses in an uncertain atmosphere that could delay hiring and investment. Lutnick emphasized that reciprocal tariffs, in which the United States applies import taxes on countries that tariff U.S. exports, will still be implemented April 2.
Major U.S. stock markets bounced off lows after Lutnick spoke, but only briefly. Significant declines already seen this week resumed within an hour. The S&P 500 stock index has fallen below where it was before Trump was elected.
Sheinbaum said she and Trump “had an excellent and respectful call in which we agreed that our work and collaboration have yielded unprecedented results,” on a post on the social media platform X, formerly Twitter.
Mexico has cracked down on cartels, sent troops to the U.S. border and delivered 29 top cartel bosses long chased by American authorities to the Trump administration in a span of weeks.
At a press conference, Sheinbaum elaborated on her call with Trump Thursday, saying that she told the president that Mexico was making great strides in fulfilling his security demands.
“I told him we’re getting results,” Sheinbaum said. But the U.S. imposed the tariffs, so she asked Trump “how are we going to continue cooperating, collaborating with something that hurts the people of Mexico?”
She added that “practically all of the trade” between the U.S. and Mexico will be exempt from tariffs until April 2.
She said the two countries will continue to work together on migration and security, and to cut back on fentanyl trafficking to the U.S.
From January to February, the amount of fentanyl seized at the border dropped more than 41%, according to Sheinbaum, citing data from U.S. Customs and Border Protection. She cited the dip as meeting a commitment made to Trump.
Ontario Premier Doug Ford, the leader of Canada’s most populous province, said that starting Monday the province will charge 25% more for electricity shipped to 1.5 million Americans in response to Trump’s tariff plan. Ontario provides electricity to Minnesota, New York and Michigan.
“This whole thing with President Trump is a mess,” Ford said Thursday. “This reprieve, we’ve went down this road before. He still threatens the tariffs on April 2.”
Ford’s office said that the tariff would remain in place even if there’s a one month reprieve from the Americans. Ford has said that so long as the threat of tariffs continue, Ontario’s position will not change.
She added that Trump said he would crack down on the flow of American weapons trafficked into Mexico, which has fueled cartel warfare in the Latin American country, though Trump has not elaborated on what his government has done to address the weapons trafficking.
Sheinbaum has been able to navigate the complex relationship with Trump and rallied Mexican nationalism with her message of Mexican sovereignty, which has generated soaring approval ratings. While tensions between Trump and Canadian Prime Minister Justin Trudeau have simmered, Sheinbaum has assumed a stern tone but has appeared to build a relatively amicable relationship with the American president.
Lutnick said both Canada and Mexico “have done a good job offering us ever more work” on stopping fentanyl at the border, a key demand that Trump has made in return for permanently lifting the tariffs. Trump has also offered many other reasons for his tariffs, including raising revenue for the federal government, returning manufacturing to the United States, and reducing the trade surpluses both countries have with the U.S.
Yet Lutnick said that he will be watching fentanyl overdose deaths in the U.S. as a key “metric” he will focus on when evaluating Canada and Mexico's efforts to combat the synthetic opioid.
In his speech to a joint session of Congress Tuesday night, Trump portrayed tariffs — which he has has also levied on China — as a source of increasing wealth and power for the United States.
Yet most economists expect the import duties to send prices higher, slow the economy, and potentially cost jobs.
The Yale University Budget Lab has estimated that the tariffs on Canada, China, and Mexico would increase inflation by a full percentage point, cut growth by half a percentage point and cost the average household about $1,600 in disposable income.
Trump appeared to acknowledge Tuesday night that there could be some pain: “There’ll be a little disturbance, but we’re okay with that. It won’t be much.”
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Associated Press writers Josh Boak, Rob Gillies, and Megan Janetsky contributed to this report. Janetsky reported from Mexico City. Gillies reported from Toronto.
