After relief to Mexico, Trump pauses tariffs on Canadian imports
What's the story
US President Donald Trump has announced a temporary suspension of the 25% tariffs he imposed this week on most goods from Canada and Mexico.
The move comes as part of a broader strategy to address concerns over trade uncertainty, inflation, and economic slowdown.
This decision has led to a delay in retaliatory tariffs by Canada till April 2, when Trump's global reciprocal tariff regime is set to take effect.
Trade agreement
Canada responds to US tariff suspension
Canadian Finance Minister Dominic LeBlanc announced Canada will delay its planned second wave of retaliatory tariffs on C$125 billion of US products until April 2.
The revised White House order also exempts potash, an essential fertilizer for US farmers, from duties.
However, it doesn't fully cover energy products, on which Trump has imposed a separate 10% levy for non-compliance with the US-Mexico-Canada Agreement on trade negotiated during his first term as president.
Tariff rationale
Trump's tariff imposition linked to fentanyl crisis
Trump imposed the tariffs after declaring a national emergency on January 20 over deaths from fentanyl overdoses.
He claimed the opioid and its precursor chemicals are smuggled from China to the US through Canada and Mexico.
The move to impose tariffs has raised concerns over inflation and growth slowdown in the US, with markets reacting negatively.
Tariff continuation
Trump maintains stance on steel and aluminum tariffs
On April 2, reciprocal tariffs will be imposed globally, unless we make significant progress in combating fentanyl, said Commerce Secretary Howard Lutnick.
He added if Canada and Mexico don't do enough to tackle the fentanyl issue by then, the conversation will shift back to reciprocal tariffs.
Meanwhile, Trump confirmed 25% tariffs on imports of steel and aluminum will go into effect as scheduled on March 12.
Economic impact
Market uncertainty persists amid trade war pressures
US stock markets have resumed their recent sell-off, with investors citing the rapid fluctuations in tariffs as a concern due to the uncertainty they are causing.
Canadian Prime Minister Justin Trudeau, who will step down as Canada's leader on Sunday, said he doesn't expect the trade war started by Trump to die down anytime soon.
He confirmed that Canada will remain in a trade war with the United States for the foreseeable future.