US President Donald Trump has a piece back in the trade conflict with Canada and Mexico.
The Republican partially exposed the tariffs for goods from the two neighboring countries – at least for the time being. For all imports from Mexico and Canada that fall under the North American free trade agreement USMCA, no penalty taxes should therefore apply by April 2. Canada and Mexico affects this to different degrees.
The USMCA (United States-Mexico-Canada Agreement) is a free trade agreement that the three countries had signed during Trump’s first term (2017 to 2021). After the beginning of his second term, however, the US President came directly with the neighbors in trade policy.
In the night of Tuesday (local time) tariffs came into force on US imports from Canada and Mexico. Trump had justified the penalty taxes of 25 percent by the fact that the two countries did not do enough against cross -border drug trafficking. For energy imports from Canada, penalty taxes of 10 percent were introduced.
Trump’s Salami tactics
An import customs is a tax that is levied on the border on goods that are introduced from abroad. As a rule, it pays the importing company. Experts consider tariffs to be a risky strategy to carry out a trade conflict because this primarily causes consumer prices and thus the normal citizens hit the most. The customs disputes of the United States with important trading partners also caused a bad atmosphere and falling share prices on the stock exchanges. The latter usually has a particularly close eye on Trump.
The US President finally gradually rowed back. Already on Wednesday he granted a one-month postponement for US auto manufacturers producing abroad. The White House announced that by the beginning of April there was an exception for all cars that come to the USA via the USMCA or Canada free trade agreement.
On Thursday, he first announced the further exemption for Mexico -and later also for Canada -according to which all goods from both countries that fall under the USMCA agreement will remain duty -free until the beginning of April. The consequences for the neighbors are different: According to the White House, around 50 percent of imports from Mexico fall under the agreement, but only 38 percent of the goods from Canada.
Different tones towards Mexico and Canada
Trump wrote on the TRUTH Social online platform that he made calls with Mexico’s President Claudia Sheinbaum and granted the postponement of “respect and accommodation”. The relationship with Mexico is good. It is now working together to prevent migrants: to prevent the illegal border crossing to the United States inside and to stop the smuggling of the chemical drug fentanyl. Sheinbaum thanked Trump on the X platform for an “excellent and respectful conversation”.
For the Canadian Prime Minister Justin Trudeau, Trump, on the other hand, had less benevolent words. And Trudeau, too, commented – in front of Trump’s partially returning – was still pessimistic and said that he would expect the trade conflict to continue “for the foreseeable future”. His phone call with Trump was “colorful” and contained moments of tension, he reported. According to a source of the “Wall Street Journal”, swear words between the two of them are said to have fallen. Canada had answered the US tariffs directly with counter -tariffs – and has so far remained.
A lot back and forth
It is not the first turn in the scramble that Trump was binding with the neighbors right after taking office. Actually, the US President had already wanted to introduce the punitive tariffs on goods from the two countries in early February. But only a few hours before the threatened punitive tariffs were originally supposed to use goods from Canada and Mexico, Trump was primarily involved in concessions. To do this, he initially pushed the trade restrictions on for 30 days. After the deadline, he ended up seriously with the tariffs.
Other trading fights continue
Trump regularly uses customs threats as a negotiation tactic to force concessions in other areas. That was already the case in his first term. And since his swearing in in January, he has long since not only broke out of the fence with Canada and Mexico. Trump also took imports from China with new tariffs – initially ten percent, in a second step he doubled to 20 percent.
The Europeans also have to expect tariffs from the new US government. Trump already expressed such a threat several times, but without giving details. The Republican generally plans to introduce mutual tariffs on a large scale – i.e. to raise import taxes wherever the United States is currently less demanding than its trading partners: inside.