President Donald Trump recently expanded exemptions on tariffs imposed on Canada and Mexico. The temporary relief has sparked cautious optimism among businesses, but trade tensions have continued to create uncertainty. The trade tensions have rattled markets, with the S&P 500 index recently dropping. Economists warned that tariffs could raise consumer prices in the U.S. and harm the economies of all three nations.
Trump stated, “I’m not even looking at the market, because long term, the United States will be very strong with what’s happening.”
Trump threatened to escalate tariffs on European Union (EU) goods following the implementation of 25% duties on U.S. steel and aluminum imports. The EU recently announced $28 billion in tariffs targeting U.S. goods.
Canada has also implemented $20.6 billion in tariffs on U.S. products, while Mexico has suspended its planned tariffs. Other countries like the U.K., China, India, Brazil, and South Korea are preparing for potential countermeasures.
Trump stated that if the EU enacts counter tariffs on U.S. products, the U.S. will impose additional penalties in retaliation. Canada’s Finance Minister announced that Canada would respond with 25% tariffs on steel, aluminum, and other goods worth $20 billion.
Mexican President Claudia Sheinbaum thanked Trump for the exemptions, while Canadian Prime Minister Justin Trudeau hinted at the likelihood of a prolonged trade war.
Trudeau stated, “Our goal remains to get these tariffs, all tariffs removed.”
The exemptions apply to goods under the US-Mexico-Canada Agreement (USMCA), including televisions, air conditioners, avocados, and beef. Tariffs on potash, a key fertilizer ingredient, were also reduced from 25% to 10%.
50% of imports from Mexico and 62% from Canada may still face tariffs, according to a White House official.
Ontario Premier Doug Ford criticized the tariff pause, claiming it “means nothing.” Ford said, “Honestly, it really bothers me. We have to do this, but I don’t want to do this.”
Treasury Secretary Scott Bessent has dismissed Canadian retaliation as counterproductive. Bessent said, “If you want to be a numbskull like Justin Trudeau and say, ‘Oh we’re going to do this,’ then tariffs are probably going to go up.”
January imports surged due to tariff fears, driving the U.S. trade deficit up 34% to over $130 billion, according to the Commerce Department.
Grace Hall covers U.S. politics & news for content partner Modern Newsstand LLC.
