President Trump moved Thursday to shield thousands of goods from 25% tariffs he levied on imports from Canada and Mexico this week but said he was not backing away from a plan to use tariffs to equalize trade imbalances and return manufacturing jobs to the U.S.
The president signed two executive orders providing a monthlong exemption for all goods in the 2020 United States-Mexico–Canada trade agreement.
On Wednesday, Mr. Trump carved out exemptions for auto manufacturers. The tariffs had wiped out months of gains on Wall Street.
After the closing bell, the Dow Jones Industrial Average was down 427 points, or nearly 1%, as investors reacted negatively to Mr. Trump’s dramatic shifts in tariff strategy. The tech-heavy Nasdaq lost 2.6% in trading Thursday.
The president shrugged off the sell-off and defended his plan. He told reporters in the Oval Office that he would impose 25% tariffs on steel and aluminum beginning Wednesday and won’t back down from levying reciprocal tariffs on imported goods from all countries beginning April. 2.
“Now it’s time for this country to stop being ripped off,” Mr. Trump said.
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Mr. Trump said the tariffs are needed to equalize trade imbalances. On Thursday, administration officials announced a record trade deficit of $131 billion in January.
Mr. Trump said other nations, including Canada, India and China, charge high tariffs on U.S. products while dumping goods into the U.S., which has hurt manufacturing here. The president wants the U.S. to become more self-reliant.
He said he would sign an executive order freeing up U.S. forests for lumber production to decrease heavy reliance on Canadian lumber. He said America can eliminate its dependency on Canadian oil imports by producing more energy. Mr. Trump has signed several executive orders to ramp up U.S. energy production.
Mr. Trump blamed the jittery stock market on globalist companies that stand to lose under the tariffs.
“I’m not even looking at the market because long term, the United States will be very strong with what’s happening here,” Mr. Trump said.
He characterized the negative side of tariffs, including higher prices and reciprocal levies, as “a little short-term interruption” and a “disruption” but said the U.S. would benefit in the long run.
The exemptions signal the president’s willingness to use the tariffs more strategically and potentially calm the markets.
The executive order lowered the tariff on Canadian potash, a mineral used in fertilizer that is critical to U.S. agriculture production, from 25% to 10%.
Auto parts were exempted amid warnings that the tariffs could dramatically raise car prices.
The president said the exemptions “make it more fair for our car manufacturers during this short-term period before April 2.”
Mr. Trump wants car manufacturers to move plants back to the U.S. to avoid the April 2 tariffs. On Monday, Honda announced it would relocate production of its Civic hybrid from Mexico to Indiana.
The 25% tariffs on Canada and Mexico were levied in response to the continued flow of fentanyl across the southern border and, to a much lesser extent, the northern border.
The lethal opioid killed 70,000 people in the U.S. last year.
Earlier Thursday, Mr. Trump spoke with Mexican President Claudia Sheinbaum and agreed to exclude all goods related to USMCA from the levy.
“I did this as an accommodation, and out of respect for, President Sheinbaum,” Mr. Trump said 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. Thank you to President Sheinbaum for your hard work and cooperation!”
Mr. Trump has a less friendly relationship with Canadian Prime Minister Justin Trudeau but gave Canada the exemption for USMCA goods nonetheless.
On April 2, the president will impose reciprocal tariffs that mirror those imposed by other nations, including Canada.
Last year’s trade deficit with Canada topped $63 billion, in part because the country imposes steep tariffs on some U.S. goods, including dairy, chicken and beef.
Canadian officials said the deficit isn’t a result of their tariffs but of their significant oil exports to the U.S.
Canadians defended their efforts to stop fentanyl from crossing into the U.S. Mr. Trudeau said less than 1% of fentanyl that crosses into the U.S. comes from Canada and that fentanyl seizures at the border declined 97% to nearly zero in January.
He called Mr. Trump’s tariffs “dumb.”
Mr. Trudeau held a 50-minute call with Mr. Trump on Wednesday.
“Justin Trudeau, of Canada, called me to ask what could be done about Tariffs,” Mr. Trump posted on Truth Social. “I told him that many people have died from Fentanyl that came through the Borders of Canada and Mexico, and nothing has convinced me that it has stopped. He said that it’s gotten better, but I said, ‘That’s not good enough.’”
Mr. Trudeau accused Mr. Trump of using fentanyl as an excuse to impose tariffs on Canada.
Mr. Trump said Mr. Trudeau, who will step down from his leadership post Sunday, is exploiting the tariffs for political gain.
“Believe it or not, despite the terrible job he’s done for Canada, I think that Justin Trudeau is using the Tariff problem, which he has largely caused, in order to run again for Prime Minister. So much fun to watch,” Mr. Trump posted Thursday.
