Trump agrees further tariff concessions but April threat remains

Donald Trump has announced that most goods imported from Mexico are to be exempt from his trade tariff regime for at least four weeks, just days after the charges were imposed.

He confirmed the move following a phone call with his Mexican counterpart Claudia Sheinbaum and, according to his commerce secretary, was due to announce a similar concession to Canada later in the day.

"We are working hard, together, on the Border, both in terms of stopping Illegal Aliens from entering the United States and, likewise, stopping Fentanyl," Mr Trump posted on Truth Social.

The latest climbdown by the US president came after he surprised financial markets on Wednesday by waiving tariffs against carmakers following pleas from motor industry bosses.

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The White House revealed then that parts due to flow into the US from Mexico and Canada as part of the manufacturing supply chain would not qualify for tariffs so long as they complied with an existing trade agreement struck between the three.

'Rules of origin' guidelines under the USMCA deal allow goods to move between the three countries tariff-free if they qualify with a designation that they were made in North America.

US commerce secretary Howard Lutnick told Sky's US partner network CNBC that if the concession was extended to Canada, then more than half of usual cross border trade volumes would be exempt.

He too signalled there were signs of progress in Mr Trump's dispute with America's closest trading partners, saying each had worked hard to make progress in tackling imports of Fentanyl - blamed for high crime and deaths in US communities.

But Mr Lutnick explained that, as things stand, the reprieve would only last until 2 April when the Trump administration plans to impose reciprocal tariffs - on top of the 25% charges that came into force on Tuesday.

The car industry believes that no products from Canada and Mexico are currently subject to tariffs as they comply with the USMCA deal agreed in 2020.

It should spare consumers extra costs of at least $4,000 on the purchase of a new vehicle, industry data showed.

While that could still change from 2 April, Mr Trump is under intense pressure to relax his tariff regime permanently amid a backlash from US firms and financial market investors who fear it is self defeating.

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A closely-watched forecast has even suggested that the threats of a trade war were enough to push the US economy into recession before Mr Trump took office.

The dollar has sunk in value and US government borrowing costs have risen on the back of the turmoil.

It is widely expected that the European Union will be next to face tariffs - possibly from 2 April - after Trump threatened action "very soon" just last week.

Commenting on the threat to the eurozone from such a move, the president of the European Central Bank Christine Lagarde said on Thursday: "Just the threat of those tariff increases and potential retaliations are putting a brake on - on investment, on consumption decisions, on employment, hiring, all the rest of it.

While Mr Trump has not issued a specific threat against the UK, her counterpart at the Bank of England Andrew Bailey told a committee of MPs on Wednesday that the US should work "multi-laterally" rather than bilaterally to resolve its disputes.

(c) Sky News 2025: Trump agrees further tariff concessions but April threat remains