US tariff news: President Trump pauses tariffs for some Canadian, Mexican goods

WASHINGTON -- President Donald Trump on Thursday paused tariffs on some products from Mexico and Canada, withdrawing major portions of a policy issued two days earlier.

The one-month exemption will lift tariffs for all Canadian and Mexican goods compliant with United States-Mexico-Canada Agreement, or USMCA, a free trade agreement.

While Trump only specified on social media posts that Mexico would be spared from the tariffs, White House officials told ABC News the reprieve would apply to Mexico and Canada.

Officials said roughly 50% of imports from Mexico comply with USMCA, and 38% of imports from Canada comply with USMCA. Motor vehicles and auto accessories make up a good portion of the of USMCA-compliant trade, the officials added.

The easing of tariffs on some Mexican goods came after a conversation between Trump and Mexican President Claudia Sheinbaum, Trump said in a post on Truth Social.

"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!" Trump said.

Minutes later, Sheinbaum reciprocated in similar fashion.

"We had an excellent and respectful call in which we agreed that our work and collaboration have yielded unprecedented results, within the framework of respect for our sovereignties," Sheinbaum said in a post on X.

Trump made the announcement soon after Commerce Secretary Howard Lutnick said a one-month delay of tariffs on Mexico and Canada would likely apply to all products compliant with the USMCA.

Trump negotiated the USMCA during his first term, signing the agreement with Canada and Mexico in 2018.

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"That which is part of President Trump's deal with Canada and Mexico (is) likely to get an exemption from these tariffs," Lutnick told CNBC on Thursday morning.

Despite the effort to ease some tariffs, stocks dropped on Thursday as fallout from the policy continued to roil markets.

The Dow Jones Industrial Average fell about 400 points, or 0.9%, while the S&P 500 fell 1.5%. The tech-heavy Nasdaq sank 2%.

The selloff erased some of the market gains delivered a day earlier after President Donald Trump gave U.S. automakers a one-month reprieve from the tariffs. Duties on a host of other goods remained in place, however.

The U.S. earlier this week slapped 25% tariffs on goods from Mexico and Canada, as well as 10% tariffs on imports from China. The fresh round of duties on Chinese goods doubled an initial set of tariffs placed on China last month.

The one-month delay in auto tariffs triggered a rally for shares of U.S. carmakers on Wednesday, but the largest companies in the sector turned down in early trading on Thursday.

Shares of Ford dropped 1.5%, while General Motors fell nearly 3%. Stellantis -- the parent company of Chrysler and Jeep -- saw its stock price fall 2%.

Tesla, the electric carmaker led by Elon Musk, tumbled 4.5% on Thursday.

The tariffs are expected to pose a challenge for U.S. automakers, many of which depend on a supply chain closely intertwined with Mexico and Canada.

The American Automotive Policy Council, or AAPC, a trade group that represents Ford, General Motors and Stellantis, praised the one-month tariff exemption.

"American Automakers Ford, GM and Stellantis applaud President Trump for recognizing that vehicles and parts that meet the high US and regional USMCA content requirements should be exempt from these tariffs," AAPC President Matt Blunt told ABC News in a statement.

Michelle Stoddart and Molly Nagle contributed to this report.