President Donald Trump said in a social media post that he will issue an exemption on tariffs for most goods coming into the U.S. from Mexico, after putting in place sweeping 25% tariffs on Tuesday.
The exemption would apply to goods compliant with the North American free trade agreement reached during Trump’s first term, and will last for one month, Trump posted after speaking with Mexican President Claudia Sheinbaum. Trump didn’t say whether that exemption would also apply to goods from Canada that complied with the trade deal.
“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!” Trump said in a post on the social media website Truth Social.
The U.S.-Mexico-Canada Agreement (USMCA), which Trump heralded during his first term as a negotiating victory, allows goods to move between the three countries tariff-free if they follow certain rules. Those rules require that a product be made entirely in North America or be substantially transformed in North America, if it is made of components from other countries. For products like autos, 75% of their content must be from North America.
The tariffs for non-USMCA compliant goods could address concerns raised by past and current U.S. officials about Chinese goods being shipped into Mexico and then sent to the U.S. tariff-free, without having met the USMCA requirement of being substantially transformed in North America.
On Tuesday, the Trump administration began charging U.S.-based companies importing goods from Canada and Mexico a 25% tariff for bringing those goods into the U.S. The move triggered a sell-off in stocks, and companies warned the added costs from the tariffs could drive prices higher on thousands of products, including alcohol, fresh produce, cars and new homes.
A day after the tariffs were put in place, the White House said it would begin exempting autos from the tariffs if the companies complied by standards in the USMCA deal, which automakers said they have been doing. The tariffs could have added $4,000 to $10,000 to the cost of cars made in North America, according to estimates from Anderson Economic Group.
In announcing the tariffs, Trump said he was using them as a tool to pressure Canada and Mexico into doing more to stop the flow of fentanyl into the U.S., though less than 1% of fentanyl seized at the U.S. border was coming from Canada. Lutnick had said the tariffs would stay in place until deaths from fentanyl declined, but he also said Thursday that Trump was pleased with the work Canada and Mexico have pledged to continue doing around fentanyl.
“Canada has done an enormous amount, they’ve offered us an enormous amount of work on fentanyl, and so is Mexico,” he said.
Trump spoke Wednesday with Canadian Prime Minister Justin Trudeau. Commerce Secretary Howard Lutnick, speaking on CNBC before Trump’s statement, suggested that goods from Canada as well as Mexico could be exempt from the 25% levies if they complied with the USMCA trade deal.
Before his announcement on the Mexican tariffs, Trump was critical of Trudeau on social media.
“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,” Trump posted on Truth Social. “So much fun to watch!”
