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.
This latest delay, which effectively impacts all trade between Mexico and the United States (despite the reference to the free trade agreement, which Canada also signed), 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!”
In the morning, Commerce Secretary Howard Lutnick said in a television interview that the levies on all goods covered by the USMCA — the sweeping free trade agreement between Mexico, the United States, and Canada, signed by Trump in 2020 — 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.
None of these efforts were enough, though. Despite Sheinbaum’s confidence in her strategy to avoid the tariff blow, she had hoped for another phone call with Trump over the weekend, but it never materialized. Mexico’s offer, made by Secretary of Economy Marcelo Ebrard to U.S. counterpart Howard Lutnick, to match Mexico’s tariffs on China with the U.S. tariffs on Beijing also fell flat.
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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