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TWN
Info Service on WTO and Trade Issues (Mar25/06) Geneva, 7 Mar (D. Ravi Kanth) — United States President Donald Trump on 6 March temporarily paused the 25% tariff on imports of all goods from Mexico while his Commerce Secretary indicated an exemption for all goods from both Canada and Mexico until 2 April, in what appears to be an allegedly chaotic unilateral “switch-on and switch-off” trade policy that is intensifying global uncertainty and trade frictions, said people familiar with the development. The term “switch-on and switch-off policies” was first used by former Indian trade minister the late Pranab Mukherjee at the signing ceremony of the Marrakesh Agreement at Marrakesh, Morocco in 1994, as reported by this correspondent in an Indian publication. In his latest post on his social media website Truth Social on 6 March, President Trump wrote: “After speaking with President Claudia Sheinbaum of Mexico, I have agreed that Mexico will not be required to pay Tariffs on anything that falls under the USMCA [United States-Mexico-Canada] Agreement,” adding that “this Agreement is until April 2nd.” President Trump justified his action on grounds that he wanted to accommodate President Sheinbaum’s satisfying measures. “Our relationship has been a very good one, and we are working hard, together, on the Border, both in terms of stopping Illegal Aliens from entering the United States and, likewise, stopping Fentanyl,” he said. However, he remained silent on what he intends to do with Canada, though he spoke to Canadian Prime Minister Justin Trudeau on 5 March, following which he exempted the 25% tariff on imports of cars from Canada and Mexico until 2 April (see SUNS #10177 dated 7 March 2025). Amidst a continued downturn in the US stock market indices and other macroeconomic metrics after the allegedly unilateral tariffs came into effect on 4 March, President Trump appears to have changed tack by exempting all products from Mexico from tariffs. In a rather puzzling turn of events, the US Commerce Secretary Howard Lutnick indicated unambiguously that the Trump administration is considering pausing tariffs for one month on all goods and services from Mexico and Canada, which entered a zero percent tariff regime in 2020. “The reprieve is for one month”, the commerce secretary told the CNBC financial broadcasting agency, insisting that “it’s likely that it will cover all USMCA-companies’ goods and services.” There seems to be growing opposition to the tariffs among farm producers in the US, as almost 25% of their produce depends on global markets, according to several studies. Any retaliatory measures by China and other countries could exacerbate the difficulties being faced on account of President Trump’s actions. Agriculture Secretary Brooke Rollins told Bloomberg News that “everything is on the table” and she is “hopeful” that the administration will decide on providing relief for the agricultural sector. “As far as specific exemptions and carveouts for the agriculture industry, perhaps for potash and fertilizer, et cetera – to be determined,” Rollins said on 5 March at the White House. “We trust the president’s leadership on this. I know he is hyper focused on these communities,” Rollins added. The US appears to be concerned over a sudden spike in its trade deficit at a new high of $131 billion in January, a development that has been attributed to companies “rushing to stockpile goods before the imposition of tariffs.” The one-month pause in tariffs on all goods entering the US from Mexico and Canada could propel the two countries to take appropriate actions against the allegedly illegal supplies of the opioid fentanyl. Despite calls on the American people to bear the small “disturbances” in the prices of goods, the Trump administration seems to be showing some signs of panic due to growing uncertainty, as several forecasts suggest that President Trump’s tariff actions could cause a recession in the US economy, said people familiar with the development. A Chinese official on 4 March plainly indicated that China will not only retaliate against the US tariffs that have now increased to 20% on all Chinese goods but is also prepared for a trade war or “any other type of war”. Before the current bout of allegedly unilateral tariffs of 20% (10% last month and 10% from 4 March) on all Chinese goods, the Biden administration had already imposed an additional tariff of 20% on all Chinese imports. Effectively, the US is allegedly imposing 40% tariffs on imports of goods from China, seemingly hurting American importers who in turn are allegedly passing the increases onto the consumers, several reports have suggested. With the proverbial “Sword of Damocles” hanging over all countries, on account of President Trump’s proposed reciprocal tariffs, the chances of sustained price increases and turmoil could become the order of the day. +
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