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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowPresident Donald Trump on Thursday postponed 25% tariffs on many imports from Mexico and some imports from Canada for a month amid widespread fears of the economic fallout from a broader trade war.
The White House insists its tariffs are about stopping the smuggling of fentanyl, but the taxes proposed by Trump have caused a gaping wound in the decades-old North American trade partnership, and Canada has felt compelled to quickly take aggressive countermeasures. Trump’s tariff plans have also caused the stock market to sink and alarmed U.S. consumers.
In addition to his claims about fentanyl, Trump has insisted that the tariffs could be resolved by fixing the trade deficit and he emphasized while speaking in the Oval Office that he still plans to impose “reciprocal” tariffs starting on April 2.
“Most of the tariffs go on April the second,” Trump said before signing the orders. “And then we have some temporary ones and small ones, relatively small, although it’s a lot of money having to do with Mexico and Canada.”
Trump said he was not looking to extend the exemption on the 25% tariff for autos for another month.
Imports from Mexico that comply with the 2020 USMCA trade pact would be excluded from the 25% tariffs for a month, according to the orders signed by Trump. Imports from Canada that comply with the trade deal would also avoid the 25% tariffs for a month, while the potash that U.S. farmers import from Canada would be tariffed at 10%, the same rate at which Trump wants to tariff Canadian energy products.
Roughly 62% of imports from Canada would likely still face the new tariffs because they’re not USMCA compliant, according to a White House official who insisted on anonymity to preview the orders on a call with reporters. Half of imports from Mexico that are not USCMA compliant would also be taxed under the orders being signed by Trump, the official said.
Mexico President Claudia Sheinbaum has planned to announce any retaliatory measures on Sunday, but Trump credited her with making progress on illegal immigration and drug smuggling as a reason for again pausing tariffs that were initially supposed to go into full effect in February.
“I did this as an accommodation, and out of respect for, President Sheinbaum,” Trump said on Truth Social. “Our relationship has been a very good one, and we are working hard, together, on the Border.”
Trump’s on-again, off-again tariffs threats have roiled financial markets, lowered consumer confidence, and enveloped many businesses in an uncertain atmosphere that could delay hiring and investment.
Major U.S. stock markets briefly bounced off lows after Commerce Secretary Howard Lutnick previewed the month-long pauses on CNBC on Thursday. Significant declines already seen this week resumed within an hour. The S&P 500 stock index has fallen below where it was before Trump was elected.
Sheinbaum said she and Trump “had an excellent and respectful call in which we agreed that our work and collaboration have yielded unprecedented results,” on a post on the social media platform X, formerly Twitter.
Mexico has cracked down on cartels, sent troops to the U.S. border and delivered 29 top cartel bosses long chased by American authorities to the Trump administration in a span of weeks.
At a press conference, Sheinbaum elaborated on her call with Trump Thursday, saying that she told the president that Mexico was making great strides in fulfilling his security demands.
“I told him we’re getting results,” Sheinbaum said. But the U.S. imposed the tariffs, so she asked Trump “how are we going to continue cooperating, collaborating with something that hurts the people of Mexico?”
She added that “practically all of the trade” between the U.S. and Mexico will be exempt from tariffs until April 2.
She said the two countries will continue to work together on migration and security, and to cut back on fentanyl trafficking to the U.S.
From January to February, the amount of fentanyl seized at the border dropped more than 41%, according to Sheinbaum, citing data from U.S. Customs and Border Protection. She cited the dip as meeting a commitment made to Trump.
Ontario Premier Doug Ford, the leader of Canada’s most populous province, said that starting Monday the province will charge 25% more for electricity shipped to 1.5 million Americans in response to Trump’s tariff plan. Ontario provides electricity to Minnesota, New York and Michigan.
“This whole thing with President Trump is a mess,” Ford said Thursday. “This reprieve, we’ve went down this road before. He still threatens the tariffs on April 2.”
Ford’s office said that the tariff would remain in place even if there’s a one month reprieve from the Americans. Ford has said that so long as the threat of tariffs continue, Ontario’s position will not change.
Lutnick said that he will be watching fentanyl overdose deaths in the U.S. as a key “metric” he will focus on when evaluating Canada and Mexico’s efforts to combat the synthetic opioid.
In his speech to a joint session of Congress Tuesday night, Trump portrayed tariffs—which he has has also levied on China at 20% due to their role in fentanyl production—as a source of increasing wealth and power for the United States.
Yet most economists expect the import duties to send prices higher, slow the economy, and potentially cost jobs.
The Yale University Budget Lab has estimated that the tariffs on Canada, China, and Mexico would increase inflation by a full percentage point, cut growth by half a percentage point and cost the average household about $1,600 in disposable income.
Trump appeared to acknowledge Tuesday night that there could be some pain: “There’ll be a little disturbance, but we’re OK with that. It won’t be much.”
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Another well thought out tariff. Oops! Guess not. What is with this guy? Then he announces his moratorium on his Not-So-Truthful social media app? This isn’t leadership, this is whack-a-mole government. Make America Gag Again.
If only we had some clue that he was not fit to be a leader.
If only we could look at his previous experience in office to see what a second term would’ve been like.
If only the consensus opinion of everybody who worked for him during his first term wasn’t that he was manifestly unfit for the job.
If only. Someone explain how this is the fault of the Democrats again? How their candidates are so awful that this was the better alternative?
Embarrassing incompetence across the board for this administration.
Here we go, again, through the looking glass, or down the rabbit hole (take your pick). Up is down, down is up.
The hunt for fentanyl is just another Trump red herring.
For one, fentanyl only became a problem in the first place because millions of people got addicted to prescription opiates and then weren’t properly tapered off, given maintenance doses, nor given any meaningful intervention to address addiction from its bio/psycho/social cause. The black market simply filled the void. Good luck stopping the black market before stopping the demand for products offered by the market.
Secondly, fentanyl is tiny and easily concealed. It’s nothing like large bricks of cocaine or other drugs. Good luck stopping it from coming into the country. Enact tariffs, travel restrictions, or whatever you want – just know that any measure short of putting an impenetrable bubble over the country à la The Simpsons Movie is doomed. If a magical bubble was put in place, the problem would be replaced by underground chemists making designer opiates until the root of the problem is fixed.
Americans demand for illicit drugs fuels that entire industry. We have a substance abuse problem in this country that needs to be addressed.
Opinion headline in today’s Star from Prof. Hicks: Trump is driving us into recession. It might have already started.
Quote: The problem isn’t that Trump administration policies have already hit the economy. The problem is that unhinged wackiness is the Trump governing strategy. That realization has exploded economic uncertainty. The best measure shows economic uncertainty at its highest point in history — worse than the week of 9/11, the Great Recession or COVID-19.
Beginning to wonder it’s an intentional ploy to force the Fed to lower rates.
An interesting theory, Joe, except that Trump is not intelligent enough to do anything with much actual intention.
Joe, that thought struck me as well. He’s just stupid enough to throw everything into the grinder to get a “win” on interest rates. Because “winning” is all that matters to this administration.
Or it’s an intentional play to manipulate the markets and allow Trump’s cronies to buy then sell at the appropriate times.
Let me suggest reading Damon Linker’s “Notes from the Middleground” Substack (which is always a good read, regardless) from this morning.
Key excerpt:
“Take Trump’s approach to tariffs.
Through the gyrations of this past week, with 25 percent tariffs that were halted at the last minute in February finally imposed on Mexico and Canada and then dropped for a “one month reprieve,” analysts have struggled to make sense of what could possibly justify such destructive and impulsive actions against two of our country’s closest trading partners. I think the most reasonable explanation is to assume that the entire point is to establish a system whereby it is taken as normal that Trump personally decides, for whatever reason he wishes, whether tariffs will be imposed on other nations, which ones, how high the tariffs will be, and when the tariff rates will be raised or lowered.
If critics point out that Canada and Mexico have done nothing to warrant the imposition of these punishing penalties, this will be irrelevant. Trump will simply lie about his reasons, accusing these rival nations of some imaginary transgression, which many Republican voters will believe is true. Along the way, as Trump lowers and raises these penalties at will, domestic companies will seek exemptions in return for favors (financial and otherwise), which Trump will gladly grant and accept. Meanwhile, senior members of his administration will be free to enrich themselves by shorting the stock market just before the announcement of an increase in tariffs (which often produces a drop in prices). If these trading partners retaliate in a way that harms the United States, Trump will use this retroactively to justify his protectionist moves. See? It’s us against them, as I always said.”