Since taking office, President Donald Trump initiated a form of trade war across the globe. He took office on January 20, and within the first 45 days, there hasn’t been a day where the term ‘tariff’ wasn’t mentioned by Trump or his administration. Initially, Trump had threatened his neighboring countries, Canada and Mexico, with tariffs, creating tensions with both. However, he has now unexpectedly softened his stance, offering tariff exemptions to both countries.
Trump Lifts Tariffs on Mexico and Canada
On Thursday, President Trump signed an order granting tariff relief to goods coming from Canada and Mexico. This is the second time in just two days that Trump has given such an exemption for goods imported from these two countries. Canada and Mexico are among the United States’ two largest trade partners. On the morning of Thursday, Trump and Canadian Prime Minister Justin Trudeau had a long phone conversation regarding the tariffs. While Mexico expressed its happiness about the decision, Canada has stated that it cannot predict the future of the tariff situation, hinting that the issue may resurface later.
25% Tariff Threat Removed for Now
Earlier, Trump had decided to impose a 25% tariff on products coming from Mexico and Canada. This decision was met with resistance from U.S. industries and lawmakers, as it threatened to raise prices on vehicles, auto parts, and other goods. On Wednesday, Trump provided a one-month reprieve for the auto industry to prevent immediate price hikes on cars and auto parts in the U.S. Now, this exemption has been extended to other sectors as well.
Future Tariffs Still on the Horizon
U.S. Commerce Secretary Howard Lutnick spoke to CNBC, suggesting that Trump may delay the 25% tariff on most products coming from Canada and Mexico. He mentioned, “Anything that falls under USMCA will be exempt from tariffs. However, anything falling outside of it will have to face the risk of tariffs.” Trump has also hinted that new tariffs could be imposed after April 2, including “reciprocal tariffs,” meaning that countries imposing tariffs on the U.S. would also face equivalent charges. Specific sectors like automobiles, pharmaceuticals, and semiconductors may face higher tariffs.
Markets React to Tariff Policies
On Thursday, the New York Stock Exchange opened with a drop in the market. U.S. investors have been wary of Trump’s tariff policies, leading to uncertainty in the markets. However, after Secretary Lutnick’s comments, the market saw a slight recovery. WTI crude oil prices fell, while both the Mexican Peso and Canadian Dollar strengthened in response to the tariff exemptions.
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