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Canada and Mexico are not subject to the new global rates because the fentanyl tax is still in place

Mexico and Canada were spared new tariffs Wednesday, as President Donald Trump excluded the top US trading partners from his 10% global tariff baseline. Previous duties are still in place.

Tariffs will not be applied to most goods from Mexico and Canada which comply with the USMCA agreement between the three nations, except for steel and aluminium and auto exports.

Trump imposed tariffs of 25% on Mexico and Canada because they did not do enough to stop migration and the trafficking of fentanyl. However, he later announced a concession for USMCA-compliant goods.

The White House fact sheet stated that "for Canada and Mexico, existing fentanyl/migration orders remain in place and are not affected by this order."

"In the event that the existing fentanyl/migration... orders are cancelled, USMCA-compliant goods will continue to receive preferential treatments, while non USMCA-compliant goods will be subject to an 12% reciprocal duty."

Analysts said that Canada and Mexico seemed to have avoided the worst case scenario.

Michael Camunez is the chief executive officer of Monarch Global Strategies. The firm advises companies doing business in Mexico.

"The North American Partners were shielded from a potentially very bad day."

Candace Laing is the president and CEO of Canadian Chamber of Commerce. She said: "We hope today's position of the U.S. regarding Canada will be part of real negotiations, leading ultimately to a long-term relationship."

Mark Carney, Canada's prime minister, said that he would still respond to Trump's declaration with countermeasures.

He said: "We will fight these tariffs by countermeasures. We will protect our workers. And we'll build the strongest G7 economy."

(source: Reuters)