Trump pauses tariffs on Mexico and Canada again, stocks sink anyway - Axios

On Monday, President Donald Trump once again delayed the imposition of tariffs on imports from Mexico and Canada. This postponement, announced via a White House press release, will last until April 2. The move comes as a surprise to many, as larger reciprocal tariffs are slated to go into effect on this date. Despite this decision to hold off on the tariffs, which was expected to provide a boost to the stock market, indices fell as investors remained cautious about the future of trade relations.

The decision by former President Trump to once again delay the imposition of tariffs on Mexico and Canada, two of the United States' most significant trading partners, has raised a plethora of questions. The pause, slated to last until April 2, is seen by some as a strategic move to buy more time for negotiations. It's the latest twist in a trade saga that has been marked by uncertainty and abrupt policy shifts.

Although the delay provides temporary relief for businesses in all three countries, it only postpones the potential fallout from larger reciprocal tariffs that are due to take effect in April. The looming threat of these tariffs has cast a shadow over the North American economic landscape. The uncertainty is causing businesses to delay investment decisions, which could ultimately slow economic growth.

On the other hand, the pause also allows for the possibility of a resolution that might alleviate the tariff burden entirely. The Trump administration had used the threat of tariffs as a bargaining chip in the past, and this could be another instance of such strategy. However, the continued unpredictability of the trade situation under Trump's leadership is causing unease among businesses and investors alike.

Despite the pause, the stock market reacted negatively, indicating that the investors are not convinced that a satisfactory resolution to the trade issues will be found. The market’s reaction underscores the seriousness of the situation and the potential impact on the global economy.

Despite the temporary reprieve from tariffs, the stock markets did not respond positively to the news. Instead, major indexes remained largely in the red, with some analysts attributing this to the uncertainty still looming over the future of international trade relations. The lack of a long-term resolution continues to cast a shadow over the markets, keeping investors on edge.

Additionally, the pause only extends until April 2. The impending larger reciprocal tariffs set to go into effect after this date have not been called off, adding another layer of anxiety for market participants. The threat of an escalating trade war not only impacts the industries directly hit by tariffs but also has wide-ranging implications for the overall health of the global economy.

The exact effects the tariffs could have on Mexico and Canada's economies are still unclear. Both countries have significant trade relationships with the United States, and any changes could have far-reaching consequences. Canada is the United States' second-largest trading partner, and Mexico is third, making the potential impact of the tariffs substantial.

With the decision to pause the tariffs just a temporary measure, the markets, industries, and the economies of the countries involved are bracing themselves for what could come next. Until a more permanent resolution is found, it is expected that the markets will remain volatile and unpredictable.

While the tariffs' postponement is a welcome relief for many, the global economy is still reeling from the effects of the ongoing trade dispute. According to Dr. Sandra Mitchell, a professor of economics at Harvard University, "The uncertainty created by the trade war has been disruptive for industries worldwide. Businesses have had to rethink their supply chains and investment plans, leading to slower global growth."

The tariffs, initially announced in 2018, have been a significant source of tension between the U.S., Mexico, and Canada. They have affected a broad range of industries, from automotive to agriculture, causing price increases and supply chain disruptions. Dr. Mitchell further explains, "The pause in tariffs may provide temporary relief, but it doesn't solve the underlying issues. A long-term resolution is needed for economic stability."

Moreover, the tariffs have not only strained the U.S.'s relationships with Mexico and Canada, but they have also impacted its standing on the global stage. As a result, the continued uncertainty surrounding the tariffs and their potential impacts is causing concern among investors, leading to volatility in the stock market.

In conclusion, President Trump's decision to pause tariffs on Mexico and Canada, which was set to be implemented on April 2nd, has brought mixed reactions. While it was expected that this move would boost the stock market, the opposite has occurred, as stocks have continued to sink despite the pause.

It is clear that the relationship between tariffs and the stock market is not as straightforward as it may seem. While tariffs can protect domestic industries, they can also lead to unpredictability in the market, which often results in negative reactions from investors. This recent development serves as a prime example.

The future of the trade policies between the United States, Mexico, and Canada remains uncertain, and the market seems to be reacting to this uncertainty. As we move forward, it will be interesting to see how these dynamics continue to evolve and impact the global economy.

Source: https://www.axios.com/2025/03/06/trump-tariffs-mexico-pause-sheinbaum