Updated March 6, 2025 @ 6:23pm
Finance Minister Dominic LeBlanc said Ottawa will suspend a second wave of retaliatory tariffs after U.S. President Donald Trump signed an executive order Thursday to pause some new duties on Canada and reduce potash levies to 10 per cent.
LeBlanc posted on social media that Canada will not proceed with planned retaliatory tariffs on $125 billion worth of U.S. products until April 2, and will continue to push the Trump administration to drop all of its latest duties.
Details of Trump's order, read out Thursday in the Oval Office, link the tariff relief to maintaining the flow of automobile parts that comply with the Canada-U.S.-Mexico Agreement, known as CUSMA, and to helping farmers who need potash for fertilizer.
It modifies the previous tariff order against Canada to allow for the flow of "parts and sub-assembly products" into the United States. It was not immediately clear exactly what would be included in the exemptions.
Markets have been in turmoil since Trump followed through Tuesday on his threat to impose a sweeping 25 per cent tariff on goods from Canada and Mexico, with a lower 10 per cent charge on Canadian energy.
Trump said there will be "a little short term interruption" but he doesn't "think it will be big."
Earlier Thursday, Trump posted on social media that Mexico would get a one-month pause on tariffs for most imports. But it appeared that the Mexico-related executive order Trump signed was similar to the tariff relief Canada received.
Prime Minister Justin Trudeau and Trump spoke Wednesday in a call the prime minister described as "colourful" and the Wall Street Journal said was "heated" and "included profanity."
Trudeau warned Thursday that Canada "will continue to be in a trade war that was launched by the United States for the foreseeable future."
U.S. Commerce Secretary Howard Lutnick told business news channel CNBC earlier Thursday that he thinks an agreement is "likely" for both Canada and Mexico.
"This comes from (the fact) that Canada has done an enormous amount, they’ve offered us an enormous amount of work on fentanyl," Lutnick said.
Ottawa responded to Trump's tariffs with retaliatory tariffs on $30 billion in American goods the same day. The second wave of Canadian levies was set to take effect 21 days later.
Ontario Premier Doug Ford said his government is still going ahead with a 25 per cent surcharge on electricity shipped to 1.5 million Americans in Minnesota, New York and Michigan starting Monday.
On Wednesday, Trump announced the one-month tariff exemption for any vehicles traded under CUSMA after talking with the Big Three automakers — Stellantis, Ford and General Motors.
Trump's trade war has essentially wiped out the continental trade pact, CUSMA's Canadian and Mexican architects said Wednesday. Canada's chief negotiator Steve Verheul and Mexico's chief negotiator Ken Smith Ramos said the devastating duties have technically suspended the trade agreement.
"With 25 per cent tariffs, it blows a complete hole in the trade agreement," Verheul said Wednesday.
"It makes it virtually worthless to us. In fact, it leaves Canada and Mexico in a far worse position than any other country in the world, practically."
Trump pushed ahead with the levies using the International Economic Emergency Powers Act — a national security statute that gives him authority to control economic transactions — after he declared an emergency on fentanyl at the northern border.
U.S. Customs and Border Protection data shows only a small volume of fentanyl crosses illegally into the United States from Canada. It reports just 13.6 grams of fentanyl seized by northern Border Patrol staff in January.
Verheul said Wednesday that using fentanyl as an excuse to impose tariffs on Canada is unjustified. "Absolutely none of this is necessary."
Verheul and Ramos were key figures in the trade talks when CUSMA was negotiated under the first Trump administration to replace the North American Free Trade Agreement. Trump described it at the time as the "best agreement we've ever made."
Verheul and Ramos have partnered with a global law firm and Kevin Brady, a Texas Republican and the former chairman of the House of Representatives committee on ways and means, to form the Coalition for North American Trade.
The coalition's goal is to defend CUSMA as the Trump administration begins to implement a massive tariff agenda.
Trump has ordered 25 per cent tariffs on all steel and aluminum imports into the United States as of March 12 — tariffs the White House has confirmed would stack on top of the other duties imposed on Canada. Trump signed an executive order to implement "reciprocal tariffs" starting April 2.
The president said Thursday those duties are still going ahead.
Other potential targets for increased tariffs include automobiles, copper, lumber and agricultural products.
There has been speculation the tariffs targeting Canada and Mexico are meant to rattle the countries ahead of a mandatory 2026 CUSMA review.
The agreement's architects say the best-case scenario is that Canada, Mexico and the U.S. agree to tweak the agreement — though that seems unlikely, considering the current geopolitical environment.
"Canadians think the U.S. is no longer a reliable trading partner," Verheul said at the Washington launch of the coalition.
This report by The Canadian Press was first published March 6, 2025.
