President Trump will shield thousands of goods from new 25% tariffs he levied this week on Mexico and more Canadian goods could be exempted by the end of the day.
Mr. Trump announced on Truth Social that, after speaking with Mexican President Claudia Sheinbaum, he agreed to exclude from the levy all goods that are part of the 2020 United States-Mexico–Canada trade agreement.
“I did this as an accommodation, and out of respect for, President Sheinbaum,” Mr. Trump said. “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!”
Canada exemptions could be next.
Commerce Secretary Howard Lutnick told CNBC that goods from both Canada and Mexico that are part of the USMCA agreement would be shielded from the 25% tariffs as early as Thursday.
Mr. Lutnick’s announcement slowed a Wall Street selloff Thursday morning.
The carve-outs follow Wednesday’s move to shield USMCA-included automakers from the 25% duty that threatened to significantly drive up the cost of vehicles.
“My expectation is the president will come to the agreement today that USMCA-compliant goods will not have a tariff for the next month until April 2,” Mr. Lutnick said.
On April 2, the president is set to impose reciprocal tariffs that would mirror the tariffs imposed by other nations, including Canada.
The 25% tariffs on Canada and Mexico were levied this week by the United States in response to the continued flow of fentanyl across the southern border and to a much lesser extent, the northern border.
Mr. Trump is also eager to equalize trade imbalances and believes the U.S. is treated unfairly by tariffs levied by Canada and European Union nations and by China’s trade practices.
The U.S. trade deficit surged to more than $131 billion in January, hitting an all-time high as record numbers of imports poured into the U.S.
The new trade deficit number fueled Mr. Trump’s desire to equalize trade imbalances with tariffs.
The president on Thursday posted on Truth Social, “Massive Trade Deficit with the World, just announced, compliments of Sleepy Joe Biden! I will change that!!!”
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 say the deficit isn’t because of tariffs but is due almost entirely to their significant oil exports into the U.S.
Canadians defended their efforts to stop fentanyl from crossing into the United States.
Prime Minister Justin 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 also called the tariffs imposed by Mr. Trump “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 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.
