Washington. President Donald Trump on Thursday postponed 25 percent tariffs on many imports from Mexico and some from Canada for a month, citing concerns over the economic fallout from a broader trade war.

The White House maintains that the tariffs are aimed at curbing fentanyl smuggling, but the proposed taxes have strained the decades-old North American trade partnership, rattled financial markets, and alarmed US consumers.

In addition to linking the tariffs to fentanyl, Trump has argued that they would help address the US trade deficit. Speaking in the Oval Office, he reiterated plans to impose “reciprocal” tariffs starting April 2.

"Most of the tariffs go into effect on April 2," Trump said before signing the orders. "Right now, we have some temporary ones and small ones—relatively small, although it's a lot of money—affecting Mexico and Canada."

Trump added that he does not plan to extend the exemption on a 25 percent tariff for autos beyond the one-month reprieve.

Temporary Exemptions and Tariff Details

Under the orders, imports from Mexico that comply with the 2020 USMCA trade pact will be exempt from the 25 percent tariff for a month. Similarly, auto-related imports from Canada that meet USMCA standards will avoid the tariff for the same period. However, potash imported from Canada—crucial for US farmers—will be subject to a 10 percent tariff, the same rate Trump has set for Canadian energy products.

According to a White House official, roughly 62 percent of Canadian imports and half of non-USMCA-compliant Mexican imports will still face the new tariffs. The official spoke on condition of anonymity to preview the orders.

Mexico’s Response

Mexican President Claudia Sheinbaum is expected to announce any retaliatory measures on Sunday. However, Trump credited her with making progress on illegal immigration and drug smuggling, citing this as a reason for delaying the tariffs.

"I did this as an accommodation and out of respect for President Sheinbaum," Trump posted on Truth Social. "Our relationship has been very good, and we are working hard together on the border."

Sheinbaum said she had a “respectful” call with Trump and that nearly all trade between the two countries would be exempt from tariffs until April 2. She added that Mexico remains committed to working with the US on migration, security, and fentanyl trafficking.

From January to February, fentanyl seizures at the US border dropped more than 41 percent, Sheinbaum said, citing U.S. Customs and Border Protection data.

Tensions with Canada Persist

Despite the temporary reprieve, relations between the US and Canada remain tense. A senior Canadian government official said Prime Minister Justin Trudeau’s phone call with Trump on Wednesday grew heated, with Trump using profanity while complaining about Canada’s dairy protections. The official, who was not authorized to speak publicly, said Trudeau did not respond in kind.

Ontario Premier Doug Ford announced that starting Monday, the province will impose a 25 percent surcharge on electricity exported to 1.5 million Americans in Minnesota, New York, and Michigan in response to Trump’s tariffs.

"This whole thing with President Trump is a mess," Ford said Thursday. "We've been down this road before. He still threatens tariffs on April 2."

Ford’s office stated that Ontario will maintain the surcharge as long as the US tariff threat persists.

Tariffs’ Economic Impact

Trump’s fluctuating tariff policies have unsettled financial markets, weakened consumer confidence, and left businesses uncertain about future investments.

Major US stock markets briefly rebounded after Commerce Secretary Howard Lutnick previewed the monthlong tariff pause on CNBC. However, declines resumed within an hour, and the S&P 500 fell below pre-Trump election levels.

Asked if the market drop was due to his tariffs, Trump responded, "A lot of them are globalist countries and companies that won’t be doing as well because we’re taking back things that have been taken from us for many years."

China Signals Retaliation

Early Friday, Chinese Foreign Minister Wang Yi warned that China would retaliate against Trump’s 20 percent tariffs on Chinese goods, imposed due to China’s alleged role in fentanyl production.

"No country should fantasize that it can suppress China and maintain good relations with China at the same time," Wang said. "Such two-faced acts are not good for stability or trust."

Most economists expect the tariffs to raise US prices, slow economic growth, and potentially cost jobs. The Yale University Budget Lab estimates that the tariffs on Canada, China, and Mexico could increase inflation by a full percentage point, reduce GDP growth by half a percentage point, and cost the average US household about $1,600 in disposable income.

Trump acknowledged potential short-term disruptions but downplayed concerns: "There'll be a little disturbance, but we’re okay with that. It won’t be much."