Trump announces one-month tariff pause on some Canadian goods, Canada halts second tariff wave

U.S. President Donald Trump has signed an executive order pausing tariffs on some Canadian imports linked to the auto industry and lowering levies on potash to 10 per cent.

Details of the order, read out in the Oval Office on Thursday, link the tariff relief to maintaining the flow of automobile parts that comply with the Canada-U.S.-Mexico Agreement, referred to in Canada often as CUSMA, and to helping farmers.

It modifies the previous tariff order against Canada to allow for the flow of “parts and sub-assembly products” into the United States. It was not clear exactly what would be included in the exemptions.

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.

Finance Minister Dominic LeBlanc says Canada will not proceed with the second wave of tariffs on $125 billion of U.S. products until April 2nd and will continue to push the Trump administration to drop all tariffs.

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.

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.

Asked whether the stock market decline was due to his tariffs, Trump said: “A lot of them are globalist countries and companies that won’t be doing as well because we’re taking back things that have been taken from us many years ago.”

Trump also claimed that he’s “not even looking at the market,” even though he has in the past asked about how the stock market is responding in front of the reporters covering him.

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.”

Prime Minister Justin Trudeau and Trump spoke Wednesday in a call the prime minister described as “colourful” and the Wall Street Journal said was “heated” and “included profanity.”

The prime minister warned Thursday that Canada “will continue to be in a trade war that was launched by the United States for the foreseeable future.”

Trudeau said Thursday that Canada will stand firm as long as the “unjustified” tariffs remain in place.

Ontario Premier Doug Ford said his government will charge 25 per cent more for electricity shipped to 1.5 million Americans in Minnesota, New York and Michigan starting Monday.

“Honestly, it really bothers me,” Ford said on news channel CNN Thursday. “We have to do this, but I don’t want to do this.”

Throughout this week’s market turmoil, Lutnick has appeared on multiple TV news programs floating different possible deals with America’s largest trading partners.

On Wednesday, Lutnick told Fox News that Trump was “leaning towards coming up with an idea” that allows a tariff exclusion for Canadian and Mexican markets that are in compliance with the CUSMA free trade deal.

The same day, Trump granted a one-month exemption for any vehicles traded under CUSMA after the Big Three automakers — Stellantis, Ford and General Motors — spoke to the president.

Trump’s trade war has essentially wiped out the continental trade pact, CUSMA’s Canadian and Mexican architects said Wednesday. Canada’s chief negotiator Steve Verheul and Mexico’s chief negotiator Ken Smith Ramos said the devastating duties have technically suspended the trade agreement.

“With 25 per cent tariffs, it blows a complete hole in the trade agreement,” Verheul said Wednesday.

“It makes it virtually worthless to us. In fact, it leaves Canada and Mexico in a far worse position than any other country in the world, practically.”

Trump pushed ahead with the levies using the International Economic Emergency Powers Act, a national security statute that gives him authority to control economic transactions, after he declared an emergency on fentanyl at the northern border.

U.S. Customs and Border Protection data shows only a small volume of fentanyl crosses illegally into the United States from Canada. It reports just 13.6 grams of fentanyl seized by northern Border Patrol staff in January.

Verheul said Wednesday that using fentanyl as an excuse to impose tariffs on Canada is unjustified. “Absolutely none of this is necessary.”

Verheul and Ramos were key figures in the trade talks when CUSMA was negotiated under the first Trump administration to replace the North American Free Trade Agreement. Trump described it at the time as the “best agreement we’ve ever made.”

Verheul and Ramos have partnered with a global law firm and Kevin Brady, a Texas Republican and the former chairman of the House of Representatives committee on ways and means, to form the Coalition for North American Trade.

The coalition’s goal is to defend CUSMA from what its members call the Trump administration’s sabre-rattling.

Trump also ordered 25 per cent tariffs on all steel and aluminum imports into the United States on March 12, which the White House has confirmed would stack on top of the other duties imposed on Canada.

Trump signed an executive order to implement “reciprocal tariffs” starting April 2. Other potential tariff targets include automobiles, copper, lumber and agricultural products.

“It doesn’t make sense anymore,” Ramos said.

Canadian and American officials have said the tariffs targeting Canada and Mexico are meant to rattle the countries ahead of a mandatory 2026 CUSMA review.

The agreement’s architects say the best-case scenario is that Canada, Mexico and the U.S. agree to tweak the agreement — although that seems unlikely, considering the current geopolitical environment.

“Canadians think the U.S. is no longer a reliable trading partner,” Verheul said at the Washington launch of the coalition.

Brady said the future of the U.S. relationship with Mexico and Canada is no longer clear. “Leaving this agreement or allowing it to expire will have a very damaging impact on millions of American workers and families.”