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U.S. President Donald Trump has decided to delay certain tariffs on imports from Canada and Mexico following significant market backlash. The move, announced on Thursday, prompted Canada to pause its own retaliatory measures, providing temporary relief to businesses and consumers concerned about escalating trade tensions.
Markets took a hit earlier in the week after tariffs of up to 25% came into effect on Tuesday, with economists warning that sweeping levies could slow U.S. economic growth and fuel inflation. In response, Trump signed an order postponing additional tariffs on Canadian and Mexican goods covered under the U.S.-Mexico-Canada Agreement (USMCA) until April 2. However, he denied that the delay was due to stock market volatility.
The temporary halt particularly benefits the auto sector, where supply chains are deeply integrated across North American borders. Automakers, including the “Big Three” U.S. manufacturers—Stellantis, Ford, and General Motors—had raised concerns over the disruptions tariffs could cause.
A White House official stated that while approximately 62% of Canadian imports will still be subject to tariffs, many of these are energy products taxed at a lower 10% rate. For Mexico, around half of its exports to the U.S. fall under the USMCA exemption.
“These changes create a much more favorable environment for our American car manufacturers,” Trump said.
Shortly after the announcement, Canadian Finance Minister Dominic LeBlanc confirmed on social media that Canada would hold off on its planned retaliatory tariffs—valued at $125 billion—until April 2 while negotiations continue.
Despite this temporary reprieve, Trump made it clear that more tariffs could still be imposed in April, emphasizing that future levies would be “reciprocal in nature” to counter what he considers unfair trade practices.
While Trump claimed “tremendous progress” in negotiations with Mexico, citing cooperation on immigration and drug trafficking, tensions remain high with Canada.
Canadian Prime Minister Justin Trudeau struck a more defiant tone, saying that trade conflicts with the U.S. would persist “for the foreseeable future.”
“Our goal remains to get these tariffs, all tariffs, removed,” Trudeau stated, reaffirming Canada’s stance against what it perceives as unfair trade measures.
Meanwhile, the White House confirmed that broad tariffs on steel and aluminum imports—set to take effect next week—would remain unchanged.
Despite the partial tariff delay, U.S. stock markets continued their downward trend on Thursday, reflecting lingering uncertainty among investors.
Scott Lincicome, vice president of general economics at the Cato Institute, described Trump’s move as “a recognition of economic reality.” He explained that tariffs disrupt global supply chains, increase costs for American consumers, and introduce market instability.
U.S. Treasury Secretary Scott Bessent, however, played down inflation concerns, arguing that any price hikes caused by tariffs would be temporary. He also defended Trump’s trade policies, stating that “access to cheap goods is not the essence of the American Dream” and that economic security and upward mobility should be the priority.
Trump has made tariffs a key component of his second-term trade policy, targeting both allies and rivals. As the U.S. trade deficit surged to a record $131.4 billion in January, analysts suggest businesses may be stockpiling goods in anticipation of future levies.
For now, businesses, investors, and global partners will be closely watching whether Trump’s temporary delay translates into long-term policy shifts—or if April 2 will bring another round of trade tensions.
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