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President Donald Trump has granted temporary exemptions to sweeping tariffs imposed earlier this week on goods coming from Mexico and Canada, the White House announced Thursday. The decision comes after intense pushback from businesses and investors concerned about the economic impact of the new trade measures.
The exemptions apply to approximately half of Mexican imports and 38% of Canadian imports that comply with the United States-Mexico-Canada Agreement (USMCA), according to a senior administration official. The move marks the second time in two months that Trump has reversed course on tariffs against the United States’ closest trading partners, leading to market instability and uncertainty among business leaders.
Uncertainty for Businesses and Investors
The abrupt policy shift has rattled the stock market, with the Dow Jones Industrial Average and the S&P 500 heading for their worst week since September 2024. Business leaders warn that ongoing uncertainty surrounding tariffs makes long-term investment planning difficult.
“The can keeps getting kicked down the road, and we don’t know what that means,” said Chuck Dardas, president of Michigan-based auto parts manufacturer AlphaUSA. “We need some certainty—not perfect certainty, but at least some stability.”
Retailers have also voiced concerns about the impact of tariffs on consumer prices. “Tariffs hit families where it hurts: groceries, school supplies, and apparel,” said Michael Hanson, executive vice president of public affairs for the Retail Industry Leaders Association. “This continuous tariff uncertainty increases pocketbook anxiety for families and throws a wrench into business planning.”
Tariffs and Trade Policy
Trump originally imposed a 25% tariff on all imports from Mexico and Canada on Tuesday, alongside an increase in tariffs on Chinese goods to 20%. The administration claimed the tariffs were necessary to curb illegal drug trafficking, particularly fentanyl, and to pressure trade partners into stricter compliance with USMCA regulations.
Following a meeting with auto industry executives on Wednesday, Trump announced the temporary exemptions, granting U.S. automakers a one-month reprieve to adjust supply chains. The Anderson Economic Group estimated that the tariffs could have raised the price of North American-made vehicles by $4,000 to $10,000 per car.
“There will always be a little short-term interruption,” Trump told reporters on Thursday. “But the countries and companies that have been ripping us off aren’t happy. The United States will be very happy.”
International Response
Mexican President-elect Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau have expressed strong concerns over the tariffs. During a Thursday press conference, Sheinbaum highlighted data from U.S. Customs and Border Protection showing a 41.5% drop in fentanyl seizures along the U.S.-Mexico border in February.
“In February alone, the reduction in fentanyl seizures on the U.S. side of the border with Mexico was significant,” Sheinbaum said. “He didn’t know about this graph until I sent it to him.”
Meanwhile, Trudeau noted that fentanyl seizures from Canada had dropped by 97% in January compared to December.
The temporary exemptions will remain in place until April 2, when Trump is expected to announce further trade actions. Businesses and investors remain on edge, uncertain about the administration’s long-term trade strategy.
