Companies across manufacturing, retail, and food industries are adjusting to shifting trade policies, as the US government partially rolls back tariffs on imports from Canada and Mexico. President Trump signed orders expanding the range of goods exempted from new levies imposed earlier in the week, adding further uncertainty for businesses navigating global trade disruptions.
The initial measures, which introduced a 25% duty on imports from Canada and Mexico and 20% on Chinese goods, had forced businesses to rethink supply chains, stockpile materials, and prepare for price increases. However, exemptions now apply to goods shipped under the US-Mexico-Canada Agreement (USMCA), including televisions, air conditioners, avocados, and beef. Tariffs on potash, a crucial ingredient for fertiliser used by US farmers, have also been reduced from 25% to 10%.
The automotive sector had been bracing for some of the steepest challenges, but carmakers have been temporarily spared from the 25% import levies. German automotive supplier Continental had been reassessing its production capacity in Canada and Mexico, where it employs over 23,000 people, but may now delay major restructuring efforts in response to the new exemptions.
French car parts manufacturer Forvia, which supplies major brands including Stellantis and Tesla, had warned that tariffs could add between €200 million and €450 million to its annual costs. Market analysts estimated that the initial levies could have resulted in a financial hit of up to $40 billion for the US automotive sector if trade patterns remained unchanged.
Other industries are also assessing the shifting landscape. Boeing, which sources key components from across North America, saw its shares drop 6.6% before the exemption announcement, as concerns over rising supply chain costs mounted. The aerospace company spends approximately $1 billion annually on suppliers in Mexico, while its Canadian operations produce critical parts for the 787 aircraft.
Retailers had also been preparing for cost increases, with some planning to absorb the impact selectively to avoid shocking consumers. Target had indicated that prices of fresh produce from Mexico would likely rise, though it aimed to keep certain seasonal goods stable by adjusting prices elsewhere. Best Buy had signalled that higher prices were inevitable as vendors passed on tariff-related costs, given that China and Mexico are its two largest sources of consumer electronics. With exemptions now in place, retailers may have more flexibility in adjusting their pricing strategies.
Following Trump’s decision, Canada has announced it will hold off on its second round of retaliatory tariffs on US goods. Industry groups had estimated that initial tariffs on Mexico and Canada could have led to over 31,000 job losses in the drinks sector alone.
The exemption orders could provide some relief, but the longer-term outlook remains uncertain. Agricultural exports were among the first targets of retaliatory measures, with China announcing tariffs of 15% on US chicken, wheat, corn, and cotton, alongside 10% duties on sorghum, soybeans, pork, and beef. Canada had introduced levies on American grains, meat, and dairy products, but the latest developments suggest a potential easing of tensions.
Despite the exemptions, a White House official has stated that approximately 50% of US imports from Mexico and 62% from Canada may still face tariffs, with those proportions likely to shift as firms adjust their trade practices. The administration remains committed to broader tariff policies, with plans to unveil recommendations for tailored “reciprocal” duties on 2 April, targeting multiple countries worldwide. Businesses remain wary of further policy changes that could disrupt supply chains and impact costs.
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