In an interview this morning, U.S. Commerce Secretary Howard Lutnick revealed that the Trump administration is likely to suspend the 25% tariffs on most goods and services imported from Canada and Mexico for a month. This move, which expands an earlier exemption granted only to the automobile sector, is aimed at alleviating trade tensions under the United States-Mexico-Canada Agreement (USMCA), the deal that replaced the North American Free Trade Agreement (NAFTA).
According to Lutnick, more than half of the imports from the two neighboring countries may qualify for this temporary reprieve, offering some relief to businesses and consumers affected by previous trade policies.He confirmed in his CNBC appearance that this one-month tariff suspension would likely apply to all USMCA-compliant goods and services. The change is expected to impact a significant portion of U.S. imports from both Canada and Mexico.
While this move could provide short-term stability for industries hit by tariffs, it is far from a permanent solution. The suspension will remain in place until April 2, 2025, after which the tariffs may be reinstated if further progress is not made on addressing key concerns such as fentanyl trafficking.
Following Lutnick’s comments, U.S. markets showed signs of recovery after an earlier dip in response to ongoing trade uncertainties. The broader economic impact of tariff threats has been profound, with many businesses facing an uncertain future. Consumer confidence has fluctuated, and some companies have delayed investments or hiring in the wake of unclear trade policies.
Despite the temporary tariff suspension, Lutnick stressed that reciprocal tariffs—where the U.S. imposes taxes on countries that apply similar tariffs on U.S. exports—would still be enforced, starting April 2. This underlines the ongoing complexity of trade relations and the likelihood that both countries will continue to navigate these issues for the foreseeable future.
In a separate statement, Canadian Prime Minister Justin Trudeau voiced cautious optimism in light of the Trump administration’s decision. He acknowledged that the tariff suspension was a “positive sign” but emphasized that the underlying trade tensions remain unresolved.
Trudeau indicated that the situation aligns with discussions Canadian officials have had with the U.S. administration, but underscored that Canada’s response to the tariffs will remain unchanged. “The tariffs are still in place, and therefore our response will stay in effect,” he remarked, signaling that Canada is prepared for continued trade challenges.
Lutnick explained that the U.S. would continue to monitor efforts by Canada and Mexico to limit fentanyl shipments. If the two countries fail to demonstrate substantial progress in addressing this issue, the tariffs could be reimposed after the one-month suspension ends.
“The decline in fentanyl overdose deaths will be the key measure by which we assess whether Canada and Mexico are doing enough,” Lutnick stated, emphasizing that the U.S. administration remains focused on the issue of drug trafficking as part of broader trade negotiations.