White House: Trump to exempt Canadian and Mexican products from tariffs

• Trump signed an order exempting tariffs on Mexico and Canada on USMCA-compliant items
• White House official says some Canadian petroleum products are compliant and some aren’t
• There is a carve out for Canadian potash
• Trump says not even looking at the market and long-term economy is very strong
• This is something we need to do
• Trump says no USMCA exemption for autos next month

“Hopefully Mexico and Canada will have done a good enough job on fentanyl that this part of the conversation will be off the table” when the new tariffs kick in, Commerce Secretary Howard Lutnick said in a statement.

A White House official cited by CNBC said about 50% of Mexican goods and only 38% of Canadian goods enter the country via USMCA compliant paths, though they note that the bulk not coming in from Canada is energy, which is subject to 10% tariffs. However Trump also talked about carve outs for oil and potash, so that number could come down.

Those percentages also go against what Sheinbaum said earlier, who said virtually all trade was covered.

We’re going to need some clarity here but the initial market reaction is positive with the S&P 500 trimming losses. We haven’t heard anything from Trudeau on this so it’s not clear if Canada will take off tariffs on $30 billion of goods that are currently in place.

One quirk in this is that many US importers don’t bother with USMCA paperwork because other, older trader deals provided equal access so this could all just be a paperwork shuffle.

This article was written by Adam Button at www.forexlive.com.