Canada halts second tariff wave after Trump announces pause

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 Mexico 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 of U.S. products until April 2, and will continue to push the Trump administration to drop all of its latest duties.

The United States has agreed to suspend tariffs on CUSMA-compliant exports from Canada until April 2nd.

As a result, Canada will not proceed with the second wave of tariffs on $125B of U.S. products until April 2nd, while we continue to work for the removal of all tariffs.

— Dominic LeBlanc (@DLeBlancNB) March 6, 2025

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Trump’s order, read out Thursday in the Oval Office, linked 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 fulfilled a pledge the president made after a conversation with the Big Three automakers — Stellantis, Ford and General Motors — on Wednesday.

An explanatory statement issued by the White House said there would be no tariffs on goods from Canada and Mexico that claim and qualify for CUSMA preference.

Trade lawyer William Pellerin, a partner at McMillan LLP in Ottawa, said his understanding is the latest order means all goods, automotive and otherwise, which meet rules of origin requirements in CUSMA would be duty-free.

However, rules of origin requirements can be complex under the trade pact.

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.

Ottawa responded 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.

Trump said there will be “a little short term interruption” but he doesn’t “think it will be big.”

“This is not a moment to celebrate,” said Matthew Holmes, chief of public policy for the Canadian Chamber of Commerce. “The economy is not a toy to play with. Constant threats and economic uncertainty have taken their toll.”

Prime Minister Justin Trudeau warned that Canada “will continue to be in a trade war that was launched by the United States for the foreseeable future.”

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.”

U.S. Commerce Secretary Howard Lutnick told business news channel CNBC earlier Thursday an agreement was likely because Canada had done an “enormous” amount of work on fentanyl.

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.

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 declaring an emergency over 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.

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 global law firms 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.

— With files from Kyle Duggan and Sarah Ritchie in Ottawa

This report by The Canadian Press was first published March 6, 2025.