On Thursday (March 6th), US President Trump announced a one month suspension of the 25% tariffs on Canada and Mexico. This decision once again highlights the fickleness of US trade policy, which not only triggers financial market volatility but also makes business leaders feel uneasy. This exemption will expire on April 2nd, marking a new round of competition in North American trade relations.

The Repetition and Impact of Tariff Exemption

The Trump administration began imposing a 25% tariff on imported goods from Mexico and Canada on Tuesday, but announced a temporary suspension just one day later and extended the exemption period until April 2nd. This volatile policy change caught the market off guard, with the S&P 500 index falling 1.8% on the day and a cumulative decline of nearly 7% since mid February.

Canadian Finance Minister LeBron responded that Canada will postpone retaliatory tariffs on $125 billion worth of US products until April 2nd. Mexican President Hornbaum also stated that a consensus was reached after speaking with Trump, emphasizing the importance of cooperation between the two sides.

The game and contradiction behind exemption

This exemption covers Canada and Mexico, but it is not a comprehensive concession. Potassium fertilizer exported from Canada is exempted as it is crucial for American farmers, while energy products are subject to a separate 10% tariff. The White House explained that some energy products do not comply with the provisions of the USMCA agreement.

Trump also threatened to continue discussing tariffs if Mexico and Canada did not make progress on the fentanyl issue before April 2. US Commerce Secretary Lutnick emphasized that a global system of reciprocal tariffs will be implemented at that time.

The chain reaction between market and economy

Economists warn that the uncertainty of tariff policies may reignite inflationary pressures, suppress demand and economic growth. Investors are uneasy about the Trump administration's repeated actions, believing that this "sometimes levy, sometimes cancel" approach has exacerbated market volatility.

Canadian Prime Minister Trudeau said that although the signal of temporarily suspending tariffs is "encouraging," it is expected that the US trade war will not end soon. Mexican and Canadian officials are also frustrated with negotiations with the United States, believing that the lack of clear goals from the United States makes it difficult to implement solutions.

conclusion

Trump's tariff policies are inconsistent and have not only disrupted the North American trade landscape, but also had a profound impact on the global market and economy. As the April 2 exemption period approaches, Canada and Mexico will face greater pressure, while uncertainty in US trade policy will continue to be one of the major risks to the global economy. In the future, the direction of North American trade relations will depend on whether all parties can find a balance point in the game.