Former President Donald Trump announced in a social media update that he plans to provide a tariff exemption for most goods entering the U.S. from Mexico, following the implementation of substantial 25% tariffs on Tuesday.
This exemption will apply to goods that meet the North American Free Trade Agreement established during Trump’s first term and will be effective for one month. Trump shared this information after his conversation with Mexican President Claudia Sheinbaum. He did not clarify if the exemption will also extend to goods from Canada that adhere to the trade deal.
“I took this step as a gesture of goodwill, and out of respect for President Sheinbaum. Our relationship has been productive, and we are collaborating closely on border issues, particularly in preventing illegal immigration and curbing fentanyl traffic. Thank you to President Sheinbaum for her dedication and partnership!” Trump wrote in a post on the social media platform Truth Social.
The U.S.-Mexico-Canada Agreement (USMCA), which Trump touted as a significant achievement during his presidency, permits goods to move freely between the three countries if they comply with specific criteria. These criteria require that a product must be entirely produced in North America or substantially transformed within the region if it includes components from other countries. For example, 75% of an automobile’s content must originate from North America.
The tariffs on non-USMCA compliant goods aim to address concerns expressed by former and current U.S. officials regarding the importation of Chinese products into Mexico that are then sent to the U.S. without meeting the USMCA requirement of substantial transformation within North America.
On Tuesday, the Trump administration initiated a 25% tariff on U.S.-based firms importing goods from Canada and Mexico. This decision led to a significant drop in stock prices, with companies warning that the increased tariffs could result in higher costs for a wide array of products, including alcohol, fresh fruits and vegetables, vehicles, and new homes.
The day after the tariffs were imposed, the White House announced it would exempt automobiles from the tariffs, provided that the companies adhered to USMCA standards, which auto manufacturers asserted they have been following. According to estimates from Anderson Economic Group, the tariffs could raise the cost of North American-made cars by $4,000 to $10,000.
In his announcement of the tariffs, Trump stated he was employing this measure to compel Canada and Mexico to take more action against the influx of fentanyl into the U.S., even though less than 1% of fentanyl intercepted at the U.S. border originated from Canada. Commerce Secretary Howard Lutnick indicated that the tariffs would remain until fentanyl-related fatalities decreased, but he also noted Thursday that Trump was satisfied with the commitments Canada and Mexico have made regarding fentanyl.
“Canada has made significant contributions, and they have pledged considerable resources to combat fentanyl, as has Mexico,” he mentioned.
Trump had a conversation on Wednesday with Canadian Prime Minister Justin Trudeau. Before Trump’s announcement, Commerce Secretary Howard Lutnick suggested that goods from both Canada and Mexico might qualify for the exemption if they complied with the USMCA agreement.
Prior to addressing the issue of tariffs on Mexico, Trump had voiced criticism of Trudeau on social media.
“Believe it or not, despite the poor job he’s done for Canada, it seems that Justin Trudeau is leveraging the Tariff issue, which he has primarily caused, to run for Prime Minister again,” Trump posted on Truth Social. “It’s quite entertaining to watch!”
