Despite US President Donald Trump’s decision to pause some tariffs, most goods from Canada and Mexico still face trade restrictions.

Tariff Changes and Exemptions

Trump did not eliminate all tariffs. Instead, he exempted goods covered by the U.S.-Mexico-Canada Agreement (USMCA). Additionally, he paused tariffs on automobiles and auto parts from both countries. Moreover, he reduced the tariff on Canadian potash, a key fertilizer ingredient, from 25% to 10%. However, despite these adjustments, most imports from Canada and Mexico remain subject to tariffs.

How Many Goods Are Exempt?

According to a White House official, 38% of Canadian goods and 49% of Mexican goods qualify for USMCA exemptions, as reported by Bloomberg. Consequently, 62% of Canadian imports and 51% of Mexican imports still face tariffs. While there is a possibility of more exemptions for Mexico, Canada will not receive any additional relief.

Tariff Confusion Hurts Markets

Furthermore, Bloomberg noted that 41% of imports fall into a gray area. These goods qualify for "most-favored nation" (MFN) rates, which are lower than standard tariffs. As a result, the uncertainty surrounding tariffs has shaken financial markets. On Thursday, the S&P 500 dropped 1.8%, bringing its weekly decline to 3.6%—the steepest drop since the U.S. banking crisis two years ago.

Tariff Exemptions Are Temporary

In addition, it is important to note that the USMCA exemptions will expire on April 2. Meanwhile, a new 25% tariff on steel and aluminum will take effect on March 12.

Canada Faces the Hardest Impact

Among the two countries, Canada will suffer the most. Since 62% of its exports to the U.S. still face tariffs, its economy will be significantly affected. Moreover, the new steel and aluminum tariffs will hit Canada the hardest because it is the largest supplier of these metals to the U.S.