The Blubber

Trump Announces Tariff Exemptions for Most Mexican Imports After Sweeping Trade Move

President Donald Trump announced in a social media post that he will grant an exemption on tariffs for most goods imported from Mexico, following the implementation of broad 25% tariffs on Tuesday.

The exemption will apply to goods that comply with the North American trade agreement Trump negotiated during his first term, and it will remain in effect until April 2. Trump made the announcement after a conversation with Mexican President Claudia Sheinbaum, though he did not specify whether similar exemptions would be extended to Canada under the same trade deal.

"I did this as an accommodation, and out of respect for President Sheinbaum. 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," Trump wrote on Truth Social. "Thank you to President Sheinbaum for your hard work and cooperation!"

Tariffs and the USMCA Agreement

The U.S.-Mexico-Canada Agreement (USMCA), which Trump hailed as a major trade victory during his first term, allows tariff-free movement of goods among the three nations if they meet specific content and production requirements.

Under USMCA rules:

• A product must be entirely made in North America or substantially transformed there if it contains foreign components.
• For automobiles, at least 75% of the content must be sourced from North America.

The new tariffs on non-compliant goods aim to prevent Chinese products from bypassing U.S. duties by being shipped through Mexico without meeting USMCA transformation requirements—a concern raised by past and current U.S. officials.

Economic Fallout and Adjustments for Automakers

The sweeping 25% tariffs on imports from Canada and Mexico, which took effect Tuesday, sent markets tumbling and sparked warnings from businesses that the policy would raise consumer prices on cars, fresh produce, alcohol, and homes.

By Wednesday, the White House said it would exempt automobiles from the tariffs—as long as companies complied with USMCA rules. Automakers had already been following the trade agreement’s standards and warned that the tariffs could have added $4,000 to $10,000 to the price of North American-made vehicles, according to estimates from Anderson Economic Group.

Tariffs as a Tool in Fentanyl Crackdown

Trump has framed the tariffs as leverage to pressure Mexico and Canada into doing more to combat the flow of fentanyl into the United States.

Despite Trump’s rationale, less than 1% of fentanyl seized at the U.S. border comes from Canada. However, Commerce Secretary Howard Lutnick defended the policy, stating that the tariffs would remain in place until fentanyl-related deaths decline.

Still, on Thursday, Lutnick signaled that Trump was encouraged by the efforts pledged by both Canada and Mexico to combat the crisis.

"Canada has done an enormous amount, they’ve offered us an enormous amount of work on fentanyl, and so is Mexico," Lutnick said.