Trump announces one-month tariff pause on some Canadian goods, lowers potash levy

U.S. President Donald Trump has signed an executive order that pauses tariffs on some Canadian imports that comply with the Canada-U.S.-Mexico Agreement linked to the auto industry, and also lowers levies on potash to 10 per cent.

The order was read out in the Oval Office and says the tariff relief is linked to the flow of parts to American car manufacturers and to helping farmers.

It was not clear exactly what would be included in the exemptions.

Markets have been in turmoil since Trump followed through Tuesday on his threat to impose sweeping economy-wide tariffs on Canada and Mexico, with a lower 10 per cent levy on Canadian energy.

Trump is denying suggestions that the growing number of carve-outs for certain industries is linked to market pressure.

He says there will be “a little short term interruption” but he doesn’t “think it will be big.”

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Mexico will also get a one-month pause on tariffs for most imports after the economy-wide duties caused market chaos all week.

Trump posted on social media that he made the decision to pause levies on Mexican imports compliant with the Canada-U.S.-Mexico Agreement on trade until April 2 after he spoke with Mexican President Claudia Sheinbaum.

“I did this as an accommodation, and out of respect for, President Sheinbaum,” Trump said. “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.”

Prime Minister Justin Trudeau and Trump spoke Wednesday in a call the prime minister described as “colourful” and the Wall Street Journal said was “heated” and “included profanity.”

The prime minister warned Thursday that Canada “will continue to be in a trade war that was launched by the United States for the foreseeable future.”

U.S. Commerce Secretary Howard Lutnick told business news channel CNBC earlier Thursday that he thinks an agreement is “likely” for both Canada and Mexico.

“This comes from that Canada has done an enormous amount, they’ve offered us an enormous amount of work on fentanyl, and so (has) Mexico,” Lutnick said.

Markets have been rioting since Trump followed through Tuesday on his threat to impose sweeping 25 per cent tariffs on Canada and Mexico, with a lower 10 per cent levy on Canadian energy.

Ottawa responded with retaliatory tariffs on $30 billion in American goods the same day. Another $125 billion in Canadian levies are set to come into effect 21 days later. Trudeau said Thursday that Canada will stand firm as long as the “unjustified” tariffs remain in place.

Ontario Premier Doug Ford said his government will charge 25 per cent more for electricity shipped to 1.5 million Americans in Minnesota, New York and Michigan starting Monday.

“Honestly, it really bothers me,” Ford said on news channel CNN Thursday. “We have to do this, but I don’t want to do this.”

Throughout this week’s market turmoil, Lutnick has appeared on multiple TV news programs floating different possible deals with America’s largest trading partners.

On Wednesday, Lutnick told Fox News that Trump was “leaning towards coming up with an idea” that allows a tariff exclusion for Canadian and Mexican markets that are in compliance with the CUSMA free trade deal.

The same day, Trump granted a one-month exemption for any vehicles traded under CUSMA after the Big Three automakers — Stellantis, Ford and General Motors — spoke to the president.

Trump’s trade war has essentially wiped out the continental trade pact, CUSMA’s Canadian and Mexican architects said Wednesday. Canada’s chief negotiator Steve Verheul and Mexico’s chief negotiator Ken Smith Ramos said the devastating duties have technically suspended the trade agreement.

“With 25 per cent tariffs, it blows a complete hole in the trade agreement,” Verheul said Wednesday.

“It makes it virtually worthless to us. In fact, it leaves Canada and Mexico in a far worse position than any other country in the world, practically.”

Trump pushed ahead with the levies using the International Economic Emergency Powers Act, a national security statute that gives him authority to control economic transactions, after he declared an emergency on fentanyl at the northern border.

U.S. Customs and Border Protection data shows only a small volume of fentanyl crosses illegally into the United States from Canada. It reports just 13.6 grams of fentanyl seized by northern Border Patrol staff in January.

Verheul said Wednesday that using fentanyl as an excuse to impose tariffs on Canada is unjustified. “Absolutely none of this is necessary.”

Verheul and Ramos were key figures in the trade talks when CUSMA was negotiated under the first Trump administration to replace the North American Free Trade Agreement. Trump described it at the time as the “best agreement we’ve ever made.”

Verheul and Ramos have partnered with a global law firm and Kevin Brady, a Texas Republican and the former chairman of the House of Representatives committee on ways and means, to form the Coalition for North American Trade.

The coalition’s goal is to defend CUSMA from what its members call the Trump administration’s sabre-rattling.

Trump also ordered 25 per cent tariffs on all steel and aluminum imports into the United States on March 12, which the White House has confirmed would stack on top of the other duties imposed on Canada.

Trump signed an executive order to implement “reciprocal tariffs” starting April 2. Other potential tariff targets include automobiles, copper, lumber and agricultural products.

“It doesn’t make sense anymore,” Ramos said.

Canadian and American officials have said the tariffs targeting Canada and Mexico are meant to rattle the countries ahead of a mandatory 2026 CUSMA review.

The agreement’s architects say the best-case scenario is that Canada, Mexico and the U.S. agree to tweak the agreement — although that seems unlikely, considering the current geopolitical environment.

“Canadians think the U.S. is no longer a reliable trading partner,” Verheul said at the Washington launch of the coalition.

Brady said the future of the U.S. relationship with Mexico and Canada is no longer clear. “Leaving this agreement or allowing it to expire will have a very damaging impact on millions of American workers and families.”

By Kelly Geraldine Malone in Washington

This report by The Canadian Press was first published March 6, 2025.