Trump delays tariffs on most Mexican and Canadian goods after call with Sheinbaum

The chaos surrounding Donald Trump’s tariff policy continues. Two days after announcing a 25% tariff on imports from Mexico and Canada, the U.S. president posted on Truth Social that: “After speaking with President Claudia Sheinbaum of Mexico,” he has agreed that “Mexico will not be required to pay Tariffs on anything that that falls under the USMCA Agreement,” and that the new extension would last until April 2. The USMCA is the sweeping free trade agreement between Mexico, the United States, and Canada, signed by Trump in 2020.

At first, it was unclear whether the announcement included Canada, which is also a signatory to the pact. The mystery was resolved a few hours later, in the afternoon. During a meeting with the press in the Oval Office, as Trump went through his daily ritual of signing executive orders, he confirmed that Canada would also benefit, on the same terms as Mexico, from this one-month respite.

This latest delay, which effectively impacts nearly all trade between Mexico and the United States, was decided, Trump wrote, “as an accommodation and out of respect for President Sheinbaum.” He added: “Our relationship has been very good one, and we are working hard, together, on the border, both in terms of stopping illegal aliens from entering the United States and likewise stopping fentanyl. Thank you to President Sheinbaum, for your hard work and cooperation!”

Sheinbaum celebrated the news on the social media platform X. “We had an excellent and respectful call in which we agreed that our work and collaboration have yielded unprecedented results, within the framework of respect for our sovereignties,” she posted. The Mexican president thanked Trump and highlighted the progress achieved during the last tariff extension in the face of the migration crisis and fentanyl trafficking. Sheinbaum explained that the pause was agreed until the first week of April because the United States plans to impose “reciprocal tariffs for all countries” after that date, and expressed her hope that the “joint work” in the bilateral relationship will continue.

“Practically all the trade we have with the United States is within the treaty,” confirmed Sheinbaum in a press conference following the conversation. Clearly relieved, the president proudly mentioned a 41.5% reduction in fentanyl trafficking from January to February. “We may not agree on some issues, but we have always treated President Trump with respect, and he has always treated us with respect,” she said.

The Mexican president acknowledged that initially, the Republican’s intention was to persist with his tariffs, but they were able to reach an agreement after their conversation, with the promise of maintaining cooperation between the two countries. This was their third call since Trump took office on January 20. “It won’t be the last, there are many issues we will have to continue discussing, especially regarding the treatment of Mexicans on the other side of the border,” she added.

Sheinbaum upheld the call for a massive event in the Zócalo, the country’s main square, next Sunday. What was originally intended to announce retaliation against the United States has now been transformed into a celebration of the agreement reached.

A confusing announcement

In the morning, Commerce Secretary Howard Lutnick said in a television interview that the levies on all goods covered by the USMCA would “likely” be postponed for a month. This latest about-face marks a significant shift in the new U.S. administration’s aggressive trade strategy. However, Trump’s message did not mention if Canada would also be affected by this new tariff exemption.

The shift in policy came as Sheinbaum awaited a call with Trump, aiming for a potential truce in the trade war ignited by Washington earlier this week in the North American region. Mexico and Canada, two long-standing allies and major trading partners of the United States, were disrupted by Trump’s tariff announcement on Tuesday — a decision that was poorly received by the markets.

On Wednesday, Trump once again reversed course, granting a one-month moratorium on automotive tariffs imposed on Canada and Mexico. This move came after companies raised concerns about the damage the administration’s erratic decisions could inflict on the automotive sector and the broader North American industry.

“It’s likely that it [Trump’s new announcement] will cover all USMCA compliant goods and services, so that which is part of President Trump’s deal with Canada and Mexico are likely to get an exemption from these tariffs,” Lutnick told CNBC. “The reprieve is for one month.”

According to Lutnick, U.S. trade in goods and services under the USMCA totaled about $1.8 trillion in 2022.

Both Sheinbaum and Canadian Prime Minister Justin Trudeau had secured a one-month moratorium on the tariffs with promises to control irregular immigration and fentanyl trafficking. In the end, these efforts were not enough.

In response to Tuesday’s announcement, and the inability to appease Trump’s tariff fury, the Mexican president threatened “tariff and non-tariff measures” against the United States. “Nobody wins with this decision,” Sheinbaum said at her press conference. “There is no reason to justify these actions,” she added. To emphasize her resolve, Sheinbaum called for a mobilization in Mexico City’s Zócalo square on Sunday, a venue historically used for important national events, to show she had the support of the people. This call was implicitly contingent on the possible outcomes of the Thursday call with Trump.

Trump’s announcement marked the end of four weeks of intense diplomatic efforts by Mexican officials in Washington, aiming to extend the one-month delay the U.S. president had granted Sheinbaum on February 3. On that day, Sheinbaum had held a tense 45-minute conversation with Trump, mediated through an interpreter, where she relied on her English skills honed during her time at the University of California, Berkeley. According to diplomatic sources, Sheinbaum considered the conversation a success in her strategy to appease Trump. Trump, for his part, called Sheinbaum “a woman I like very much.”

Mexico had committed to reinforcing the border with an additional 10,000 soldiers, and during these weeks, Mexican authorities had arrested hundreds of individuals linked to drug trafficking, confiscating significant quantities of narcotics, including fentanyl. However, no gesture was as significant as the handover of 29 prisoners to the United States, all involved in drug-related crimes. Among them was Rafael Caro Quintero, the founder of the Guadalajara Cartel, wanted in the U.S. for the 1985 kidnapping, torture, and murder of DEA agent Kiki Camarena.

The tariffs on Mexico, Canada, and China are just the beginning of a broader trade war that the United States hopes will reduce its trade deficit (the difference between what it imports and exports). In 2024, the U.S. imported $3.29 trillion worth of goods and exported $2.08 trillion, resulting in a record trade deficit of $1.212 trillion. Of the total merchandise imports, 41% — about $1.35 trillion — came from Mexico, Canada, and China, and these three countries represented nearly half of the trade imbalance for the world’s largest economy.

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