Adds Canada reaction
US president Donald Trump's sweeping tariff measures largely spared Mexico and Canada from additional penalties, as the US-Mexico-Canada free trade agreement (USMCA) will continue to exempt most commerce, including Mexico's energy exports.
According to Trump's tariff announcement on Wednesday, all foreign imports into the US will be subject to a minimum 10pc tax starting on 5 April, with levels as high as 34pc for China and 20pc for the EU. Mexico and Canada are the US' closest trading partners and have seen tariffs imposed and then postponed several times this year, but remained mostly exempt from Trump's "reciprocal" tariffs.
Energy and "certain minerals that are not available in the US" imported from all other countries also will be exempt from the tariffs. Trump also did not reimpose punitive tariffs on energy and other imports from Canada and Mexico. All products covered by the USMCA, which include energy commodities, are exempt as well.
Yet steel and aluminum, cars, trucks and auto parts from Mexico and Canada remain subject to separate tariffs. Steel and aluminum imports are subject to 25pc, in effect since 12 March. The 25pc tariff on all imported cars and trucks will go into effect on Thursday, whereas a 25pc tax on auto parts will go into effect on 3 May.
Mexico's president Claudia Sheinbaum this morning emphasized the "good relationship" and "mutual respect" between Mexico and the US, which she said was key to Trump's decision to prioritize the USMCA over potential further tariffs on Mexican imports.
"So far, we have managed to reach a relatively more privileged position when it comes to these tariffs," Sheinbaum said. "Many of our industries are now exempt from tariffs. We aim to reach a better position regarding steel, aluminum and auto parts exports, too."
The Mexican peso strengthened by 1.5pc against the US dollar in the wake of the tariff announcement, to Ps19.96/$1 by late morning on Thursday from Ps20.25/$1 on Wednesday.
Mexico has not placed any tariffs on imports from the US, which may have eliminated the need for the US to reciprocate with tariffs. "In contrast to what will apply to 185 global economies, Mexico remains exempt from reciprocal tariffs," Mexico's economy minister Marcelo Ebrard said.
Mexico exported 500,000 b/d of crude to the US last year, making the US by far the most important export market for the nation's commodity. Mexico also imports the majority of its motor fuels and LPG from the US.
If US won't lead, Canada will: Carney
To the north, Canada's prime minister says the US' latest trade actions will "rupture" the global economy.
"The global economy is fundamentally different today than it was yesterday," said prime minister Mark Carney on Thursday while announcing retaliatory tariffs on auto imports from the US.
Canada is matching the US with 25pc tariffs on all vehicles imported from the US that are not compliant with the USMCA, referred to as CUSMA in Canada. But unlike the US tariffs, which took effect Thursday, Canada's will not include auto parts.
Automaker Stellantis has informed Unifor Local 444 that it is shutting down the Windsor Assembly Plant in Ontario for two weeks starting on 7 April, with the primary driver being Trump's tariffs. The closure will affect 3,600 workers.
Trump on 2 April unveiled a chart of dozens of countries the US is targeting with new tariffs, but that lengthy list may also represent opportunity for Canada and Mexico, who have already been dealing with US trade action.
"The world is waking up today to a reality that Canada has been living with for months," Canadian Chamber of Commerce president Candace Laing said, a reality which Carney views as an opportunity for his country.
"Canada is ready to take a leadership role in building a coalition of like-minded countries who share our values," said Carney. "If the United States no longer wants to lead, Canada will."
