Tariff situation changes minute-by-minute

Who knows? The tariff situation involving the United States, Canada, and Mexico appears to change on a minute-by-minute basis. As expected, President Donald Trump’s previously announced 25 percent tariffs on Canada and Mexico went into effect at 12:01 a.m. EST on March 4, a move that would drastically affect the cost and flow of goods crossing the border. One day later, the White House announced Wednesday that a 30-day reprieve would be given to automakers for cars coming in through the United States-Mexico-Canada agreement (USMCA).

Today, the White House first announced that the tariffs against Mexican goods that comply with the USMCA free trade act would be delayed a month. Mexican President Claudia Sheinbaum had earlier said that Mexico would announce its retaliatory tariffs on Sunday, March 9. Following a telephone conversation between the two leaders, Trump posted on social media and wrote, “After speaking with President Claudia Sheinbaum of Mexico, I have agreed that Mexico will not be required to pay tariffs on anything that falls under the USMCA agreement.” 

U.S. Commerce Secretary Howard Lutnick confirmed that USMCA-compliant goods would remain tariff-free until April 2. Neither the President nor the Commerce Secretary mentioned that the exemption would also apply to Canada. Unlike Mexico, Canada had immediately announced its counter tariffs upon the imposition of the U.S. tariffs.

Then, later on Thursday, Trump announced that tariffs on Canadian USMCA-compliant goods would also be given a reprieve until April 2.

In an earlier press conference held in Ottawa, Canadian Prime Minister Justin Trudeau said that he had spoken with the President in a conversation that he described as “colorful.” He declined to go into detail, but press accounts have said there was profanity used, but not by the Prime Minister, whom Trump commonly refers to as Governor. Vice President JD Vance was also in on the call.

Trudeau also said that “I can confirm that we will continue to be in a trade war that was launched by the United States for the foreseeable future.”

Both the Canadian and Mexican public have rallied behind their leaders’ resistance to the tariffs. Government liquor stores across the country have de-stocked U.S. booze, especially those coming from red states. The Ontario liquor market is huge, with annual retail sales typically exceeding $6-7 billion CAD. B.C.’s market is smaller but still represents annual sales of $3-4 billion CAD.

In addition, Buy Local campaigns have spontaneously sprung up in both countries.

Apart from the exempted car manufacturers, the President had levied 25 percent tariffs on goods from Canada and an additional 10 percent tariffs on China. He imposed a lower 10 percent tariff on Canadian energy at the same time. 

On March 4, Canada immediately imposed 25 percent tariffs on $30 billion worth of U.S. products and said it would expand that to cover another $125 billion in three weeks’ time. 

Speaking from Parliament Hill in Ottawa on March 4, Canadian Prime Minister Justin Trudeau referred to President Trump as Donald and said the U.S. move to impose tariffs was “a very dumb thing to do,” adding that it would hurt both American and Canadian families.

In announcing the tariffs on March 3, Trump cited the fentanyl crisis, trade imbalances, and border issues as reasons for their imposition.

Trump also said the tariffs would incentivize Canada and Mexico to build car manufacturing plants in the U.S. 

The stress placed on fentanyl by Trump has people north of the border scratching their heads. According to federal statistics, U.S. border agencies seized 21,889 pounds of fentanyl during the 2024 fiscal year. Of that, just 43 pounds was seized at the U.S./Canada border, about 0.2 percent. Just over 21,000 pounds were impounded at the Mexican border. Since the end of the 2024 fiscal year, even less fentanyl has been seized at the Canadian border. The Canadian government also appointed a fentanyl border czar last month in response to Trump’s agitation on the subject.

As far as the trade deficit goes, it’s true that Canada runs a slight advantage on trade vis-à-vis the U.S. While Trump has said that the U.S. is subsidizing Canada to the tune of $200 billion annually, no one seems to know where that figure originates. Including goods and services, the actual trade deficit is around $32 billion in Canada’s favor. If Canadian oil sales to the U.S. were excluded, the U.S. would have a trade surplus of $58 billion.

Stocks quickly slipped after the March 3 announcement. The S&P 500 has dropped from a high of 6,200 in February to 5,842. The Dow Jones opened at 42,518 on March 5, down from its 52-week high of 45,073. Nasdaq sank 2.6 percent. Investor Warren Buffett was quoted on March 2 saying that tariffs are “an act of war,” adding that “over time, they are a tax on goods. I mean, the Tooth Fairy doesn’t pay them.” 

The reprieve given to both Mexico and Canada hasn’t done much to reassure the stock market. On Thursday, the NYSE was down 2 percent even after the announcement. Tariffs against steel and aluminum are still scheduled to go into effect on March 12. Canada is a major supplier of both metals to the U.S. marketplace.

Speaking to the press on Thursday, Trump was emphatic about America’s ability to do without Canadian trade. “We don’t need their energy, we don’t need their steel and aluminum, and we don’t need their trees,” he asserted.

Canadian travelers to the U.S. have encountered some confusion at the border. Reports by the CBC have quoted accounts by Canadians who have been assessed 25 percent duty plus taxes on purchases made in the U.S. Exemptions that had previously been applied were no longer to be allowed, they said.