President Donald Trump has postponed tariffs on Mexico and Canada that he had imposed earlier this week, the latest twist in fast-shifting trade policy that has shaken financial markets.
The exemption, which will expire on April 2, covers both of the two largest US trading partners. Mr Trump had earlier only mentioned an extension for Mexico, but the has now signed a tariffs order that covers Canada as well.
The US president wrote on Truth Social that, having spoken with Claudia Sheinbaum, the president of Mexico, he was pausing the tariffs until April 2.
He said: “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. Thank you to President Sheinbaum for your hard work and cooperation!”
Ms Sheinbaum said: “We had an excellent and respectful call in which we agreed that our work and collaboration have yielded unprecedented results, within the framework of respect for our sovereignties. We will continue to work together, particularly on migration and security issues, which include reducing the illegal crossing of fentanyl into the United States, as well as weapons into Mexico.”
But the US president also stepped up his personal attacks on his Canadian counterpart this afternoon. He wrote on social media: “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!”
Canadian Liberal party members will select a successor to Mr Trudeau on March 9 after he announced his resignation in January. A national election is expected soon after.
The announcement on Mexican and Canadian tariffs comes after US commerce secretary Howard Lutnick told CNBC that both countries would probably receive a one-month exclusion.
“It’s likely that it will cover all USMCA [United States-Mexico-Canada Agreement] compliant goods and services, so that which is part of President Trump’s deal with Canada and Mexico are likely to get an exemption from these tariffs,” Mr Lutnick told the broadcaster earlier this afternoon.
The USMCA is a trade deal with Mexico and Canada that covered $1.8 trillion (£1.4 trillion) worth of trade in 2022, including cars, clothing and textiles, and agricultural products. The deal was struck by President Trump during his first term and came into force in 2020.
Mr Lutnick said his “off the cuff” estimate was the change would involve more than 50pc of the goods imported from the Mexico and Canada.
He was speaking shortly after stocks plunged on Wall Street at the start of trading. Donald Trump’s global trade war has alarmed investors just as fears grow that an AI-fuelled bubble on US markets is ready to burst.
The tech-heavy Nasdaq Composite dropped as much as 2pc, the benchmark S&P 500 fell 1.6pc and the Dow Jones Industrial Average declined by as much as 1.4pc on a roller-coaster week for stocks.
However, the markets partially recovered after Mr Lutnick’s comments but still remained down during the day.
Rabobank strategist Matthew Cairns said: “The notion of starting a trade war, which will result in retaliation from the countries that are targeted means there will be additional pressure on the US.
“That is not a great story for equities and earnings growth because US households are going to be poorer.”
Investors were already grappling with a deepening global sell-off in bond markets after Mr Trump shook up the world order with his tariffs and by withholding military aid to Ukraine.
