Washington, D.C. – President Donald Trump announced that Mexico will not be subject to tariffs on goods covered by the trade agreement with the United States and Canada until April 2nd. The exemption also applies to Canada, with a government source from Canada indicating expectations for a similar arrangement.

This decision marks the second reversal within two days from Trump regarding his tariff policies. Just the day before, he had unveiled a temporary exemption for carmakers from 25% import taxes, only to walk back on the implementation shortly after.

Commerce Secretary Howard Lutnick hinted at the possibility of extending the temporary tariff exemption to all products within the United States-Mexico-Canada Agreement (USMCA). This agreement, established during Trump’s first term, covers various industries such as automobiles, dairy, lumber, and financial services.

Trump took to social media platform Truth Social to confirm Mexico’s tariff exemption until early April after a discussion with Mexican President Claudia Sheinbaum. The two leaders also pledged to collaborate in combating the flow of opioid fentanyl from Mexico into the US and the trafficking of guns in the opposite direction.

While an exemption for Canada is anticipated, Trump criticized Canadian Prime Minister Justin Trudeau on social media earlier in the day. Despite this, Ontario Premier Doug Ford stated intentions to proceed with a 25% tariff on electricity supplied to 1.5 million homes and businesses in New York, Michigan, and Minnesota starting next week.

The USMCA officially went into effect in 2020 after extensive negotiations and revisions, replacing the previous North American Free Trade Agreement from 1994. The interconnected economies of the US, Canada, and Mexico witness billions of dollars in cross-border trade daily, with the imposition of tariffs sparking trade tensions among the nations and with China.

Trump’s rationale for tariffs revolves around protecting American industries and boosting domestic manufacturing, despite concerns from economists about potential price hikes for US consumers. The integrated supply chains between the US and its neighbors have raised apprehensions among businesses regarding the impact of tariffs on their operations.

Earlier data from the Commerce Department revealed a significant increase in US imports in January, driven by concerns over tariffs. The trade deficit surged by 34% to exceed $130 billion, with imports for the month rising by 10%, indicating the repercussions of the tariff policies on the economy.