U.S. President Donald Trump announced a temporary suspension of steep tariffs on Canada and Mexico on Thursday, March 6, 2025, offering a brief reprieve for businesses and consumers following strong backlash from global markets.
The decision came after the implementation of tariffs of up to 25% on imports from the two neighboring countries on Tuesday, March 4, 2025. The move had caused stock markets to drop significantly, with economists cautioning that such broad tariffs could slow U.S. economic growth and contribute to rising inflation in the near term.
Although the Republican president rejected claims that his trade policies were responsible for market instability, he opted to temporarily pause the tariffs on trade with Canada and Mexico that falls under a regional agreement.
Additionally, Mr. Trump reduced the newly imposed 25% tariff on Canadian potash, a crucial component in fertilizer. U.S. officials noted that their country does not produce large amounts of this resource, making the import levy particularly impactful.
The suspension of these tariffs, which will remain in effect until April 2, follows a similar move a day earlier when the White House announced temporary relief for automakers.
“These changes make conditions much more favorable for our American car manufacturers,” Mr. Trump said on Thursday, March 6, 2025.
However, he emphasized that significant updates would be announced on April 2, when he is expected to introduce “reciprocal tariffs” aimed at addressing what Washington perceives as unfair trade practices. He made it clear that Canadian and Mexican goods could still be subject to new levies after that date.
At the same time, Mr. Trump confirmed that tariffs on steel and aluminum, set to take effect next week, would remain unchanged.
‘Good’ Relationship With Mexico
Explaining the temporary relief for some Mexican imports, Mr. Trump stated on Truth Social that he made the decision “as an accommodation, and out of respect for” Mexican President Claudia Sheinbaum. He added, “Our relationship has been a very good one.”
His remarks about Mexico stood in stark contrast to his tense relations with Canadian Prime Minister Justin Trudeau.
On Thursday, March 6, 2025, Mr. Trudeau acknowledged that some industries might receive temporary exemptions but maintained that Canada would remain in a trade conflict with the U.S. for the foreseeable future.
“Our goal remains to get these tariffs, all tariffs removed,” Mr. Trudeau asserted.
‘Economic Reality’
Scott Lincicome, vice president of general economics at the Cato Institute, described Mr. Trump’s decision to ease tariffs on Mexico as “a recognition of economic reality.”
He explained that the move demonstrated an understanding of how tariffs disrupt supply chains, place financial burdens on consumers, and create uncertainty that markets dislike. “The market doesn’t like them and certainly doesn’t like the uncertainty surrounding them,” Mr. Lincicome told AFP.
Since beginning his second term in January, Mr. Trump has frequently threatened tariffs against both allies and adversaries.
He has defended tariffs on Canada, Mexico, and China as necessary measures to curb illegal immigration and combat the trafficking of fentanyl, a powerful synthetic opioid.
However, official data from both Canadian and U.S. government sources indicate that Canada contributes less than 1% of the fentanyl in the illicit U.S. supply. Furthermore, Canada is not a major source of illegal immigration, particularly in comparison to migration across the southern border with Mexico.
Meanwhile, China has rejected U.S. accusations regarding its role in fentanyl trafficking, asserting that the issue is a domestic matter for the U.S. and that tariffs will not address it.
Inflation and Trade Deficit Concerns
U.S. Treasury Secretary Scott Bessent dismissed concerns on Thursday, March 6, 2025, that Mr. Trump’s tariffs would drive up inflation, stating that any effect on prices would likely be temporary.
Mr. Trump has consistently portrayed tariffs as a tool for generating government revenue and correcting trade imbalances.
New government data released on Thursday, March 6, 2025, showed that the U.S. trade deficit had reached an all-time high in January.
The Commerce Department reported that the overall trade deficit of the world’s largest economy surged by 34% to $131.4 billion, driven by a sharp increase in imports.
Analysts suggested that a significant portion of the rise in the trade deficit was due to increased gold imports. However, data also indicated that many businesses had boosted their imports in anticipation of potential new tariffs.