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U.S. President Donald Trump on Thursday “adjusted” an order imposing tariffs on Canada and Mexico, delaying or reducing levies on many goods until April 2. The full delay will be applied to any good in compliance with the Canada-U.S.-Mexico trade agreement (CUSMA). While a fact sheet released by the White House declared that the “Dealmaker-In-Chief” intended the moves to “minimize disruption to the automotive industry,” the changes are broader than that. Here’s a look at what is now subject to tariffs and what isn’t — at least for now.

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What did the U.S. change on Thursday?

Trump’s latest move means that certain goods from Canada and Mexico will not face tariffs until April 2. According to the White House fact sheet, there will be no tariffs on goods from Canada and Mexico that “claim and qualify” for CUSMA preference. Products from the two countries that do not satisfy CUSMA rules of origin remain subject to 25 per cent tariffs. The U.S. also reconfirmed that lowered tariff rates of 10 per cent will apply to Canadian-origin energy products, alongside potash from Canada and Mexico, that falls outside of CUSMA preference. Any new tariff exemptions will not be retroactive, the White House said.

What does it mean to “claim and qualify” for CUSMA preference”?

Last year, around 38 per cent of Canadian imports and half of Mexican imports used the CUSMA preference, which allows goods to receive zero or near-zero customs duties, according to a White House official who spoke to reporters on Thursday. The deal, which was signed by the three countries in 2018, outlined “rules of origin” to determine whether a product is entitled to preferential duties under the agreement. The guidelines stipulate that a product qualifies for CUSMA preference if it originates or is manufactured entirely from materials sourced from the U.S., Mexico, or Canada. Canadian exporters who want to claim preferential tariff treatment under CUSMA are required to include a “certificate of origin” in their shipments. A large proportion of the goods that qualify for preferential treatment include automotive vehicles and related parts, the White House said.

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What doesn’t fall under CUSMA?

Goods that fall under CUSMA include a wide range of products, from nearly all agricultural items, apparel and textiles, to vehicles and car parts. “Almost anything and everything” could be CUSMA compliant and come in duty-free, but some elements in the certificate of origin are “extremely onerous,” said Nicole Bivens Collinson, managing principal at Sandler, Travis & Rosenberg P.A., a customs and international trade firm. As a result, some importers prefer to use the “most favoured nation” trade rule instead of utilizing CUSMA’s preferential treatment for duty-free access. Those items would thus be subject to tariffs, until the CUSMA process is followed. Oil is covered by CUSMA, but a White House official said it typically does not qualify for CUSMA preference.

How did Canada respond?

In response, Ottawa has paused its second phase of retaliatory tariffs of $125 billion of U.S. goods, according to Canada’s finance minister Dominic LeBlanc. “The United States has agreed to suspend tariffs on CUSMA-compliant exports from Canada until April 2. As a result, Canada will not proceed with the second wave of tariffs on $125 Billion of U.S. products until April 2, while we continue to work for the removal of all tariffs,” LeBlanc wrote on X on Thursday. Jacques Shore, a partner at Gowling WLG, said that Canada will “continue to be mired in a period of uncertainty as we’re all stuck between Trump and a hard place. We have to look at that very seriously, and hope for the best but prepare for the worst.”

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