Commerce Secretary Howard Lutonic has shown that President Donald Trump is expected to delay the imposition of 25% tariffs on Canada and Mexico on all goods and services covered by the USMCA trade agreement, providing potential reprieve to the US's biggest trading partners.
Lutnick told CNBC that Trump decided on Thursday the details of the one-month exemption, “I think it's likely to cover all USMCA-compliant goods and services.”
“If you lived under Donald Trump's US, Mexico and Canada agreement, you'll now get a deferral from the tariffs. And if you choose to go outside of it, you did it at your own risk, and today is when that calculation comes,” Rutnick said.
The exemption is set to last until April 2nd, after which Trump intends to introduce new tariffs, including “mutual” duties in other countries and industry-specific taxation in sectors such as automobiles, drugs and semiconductors.
Investors gave relief to the news, with the Dow Jones industrial average down 500 points in the open, but erased the majority of losses late Thursday morning. The Blue Chip Index recently had a 69 points off at 42,936.68.
Meanwhile, WTI's crude oil futures fell to a decline in session, while the Canadian dollar and Mexican pesos benefited.
Trump has bolstered his commitment to reshaping the US trade policy in social media posts, vowing to “change” the country's “massive trade deficit with the world” and demonstrates his determination to move forward with tariffs.
Lutnick also added that he and Trump will be talking to Mexican officials later that day, with both Mexico and Canada “providing us with a huge amount of work on fentanyl.”
The administration linked tariffs and China's 20% obligations, along with efforts to curb illegal fentanyl trafficking and migration to the US.
Previously, Trump had a discussion with Canadian Prime Minister Justin Trudeau, following his previous offer for a one-month exemption for USMCA-compliant cars.
The White House has already announced a temporary postponement of car rates, and Lutnick's latest statement suggests other industries could also receive exemptions.
The move comes amid a volatile week of trade policy as Trump imposes full 25% tariffs on Canada and Mexico, with Canadian energy products facing a 10% share.
In response, Canada launched retaliatory tariffs on US goods, increasing tensions between the two countries.
