Stock markets rebounded on Wednesday, as U.S. President Donald Trump abruptly announced a 90-day pause on his so-called “reciprocal tariffs” on many countries, with the exception of China.
While raising tariffs on China from 104 to 125 per cent, Trump said other countries who were subject to new tariffs announced last week — as high as 49 per cent — would all revert to his administration’s baseline 10 per cent tariff rate until early July.
Treasury Secretary Scott Bessent initially said the 10 per cent baseline would apply to Canada and Mexico, but the White House later clarified that there are no changes to tariffs on Canadian goods with the April 9 announcement.
Canadian exports that are meet the terms of the Canada-U.S.-Mexico trade deal (CUSMA or USMCA) remain exempt, while non-compliant exports are still subject to the 25 per cent so-called “fentanyl” tariff that was imposed in early March. Sector-specific tariffs on autos, steel, aluminum, and softwood lumber remain in effect as well.
If the 25 per cent “fentanyl” tariff on Canada and Mexico were to be cancelled, it appears non-CUSMA compliant exports would be subject to the universal 10 per cent rate, as opposed to a 12 per cent rate mentioned a week ago.
While Bessent told reporters the pause was part of Trump’s strategy “all along,” Trump later said the decision to pause “came together early this morning” after a meeting with Bessent and Commerce Secretary Howard Lutnick.
U.S. Trade Representative Jamieson Greer was in the middle of defending the tariffs — the largest imposed by the U.S. in over a century — at a House Ways and Means Committee hearing when Trump announced in a post on Truth Social that he was implementing the 90-day pause.
The higher tariff on China may have little effect in reality, as the 104 per cent “reciprocal” tariff that took effect earlier in the day was already prohibitive for many imports.
While the tariff news was unfolding on Wednesday, Pete Hoekstra, Trump’s nominee for ambassador to Canada, was confirmed in a 60-37 vote in the U.S. Senate.
