President Donald Trump on Thursday issued exemptions on tariffs for a wide range of goods coming into the U.S. from Mexico and Canada, two days after putting in place sweeping 25% tariffs that rattled stock markets, as businesses warned the move would increase prices for consumers.
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The exemption would apply to goods compliant with the North American free trade agreement reached during Trump’s first term and will last until April 2, when Trump plans another round of retaliatory tariffs on goods from a range of countries.
About half of goods coming into the U.S. from Mexico would fall under the exemption and around 38% of goods from Canada would qualify, said a senior administration official. That includes potash, which is used in fertilizers.
But some Canadian energy products won’t qualify and will be subjected to a 10% tariff. And all other goods, including computers from Mexico, will be subjected to the 25% tariff, the senior administration official said.
“I did this as an accommodation, and out of respect for, President Sheinbaum,” Trump wrote in a post on the social media website Truth Social earlier Thursday. “Our relationship has been a 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!”
The U.S.-Mexico-Canada Agreement (USMCA), which Trump heralded during his first term as a negotiating victory, allows goods to move between the three countries tariff-free if they follow certain rules. Those rules require that a product be made entirely in North America or be substantially transformed in North America, if it is made of components from other countries. For products like autos, 75% of their content must be from North America.
The tariffs for non-USMCA compliant goods could address concerns raised by past and current U.S. officials about Chinese goods being shipped into Mexico and then sent to the U.S. tariff-free, without having met the USMCA requirement of being substantially transformed in North America.
On Tuesday, the Trump administration began charging U.S.-based companies importing goods from Canada and Mexico a 25% tariff for bringing those goods into the U.S. Trump also increased the tariff on goods from China to 20%, on top of tariffs already in place from his first term in office.
The move triggered a sell-off in stocks, and companies warned the added costs from the tariffs could drive prices higher on thousands of products, including alcohol, fresh produce, cars and new homes.
A day after the tariffs were put in place, the White House said it would begin exempting autos from the tariffs if the companies complied by standards in the USMCA deal, which automakers said they have been doing. The tariffs could have added $4,000 to $10,000 to the cost of cars made in North America, according to estimates from Anderson Economic Group.
In announcing the tariffs, Trump said he was using them as a tool to pressure Canada and Mexico into doing more to stop the flow of fentanyl into the U.S., though less than 1% of fentanyl seized at the U.S. border was coming from Canada. The United States recorded 87,000 drug overdose deaths from October 2023 to September 2024, a decrease from 114,000 the previous year, according to preliminary data from the Centers for Disease Control and Prevention.
Mexico’s Sheinbaum said during a press conference Thursday that, in her call with Trump, she cited a graph from U.S. Customs and Border Protection showing a drop in fentanyl seizers, which she said Trump hadn’t previously seen.
“In February alone, the reduction in fentanyl seizures on the United States side of the border with Mexico was reduced by 41.5%. He didn’t know about this graph until I sent it to him,” Sheinbaum said.
Trump spoke Wednesday with Canadian Prime Minister Justin Trudeau, who said earlier in the week that there had been a 97% drop in fentanyl seizures from January compared to December, with less than half an ounce seized in January.
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