Trump Imposes 35% Tariff on Canada, Offers Reprieve to Mexico

President Trump on Thursday night imposed a 35 percent tariff on Canada, deepening his attack on a country that had long been a close American partner, but that Mr. Trump has consistently disparaged since taking office in January as having taken advantage of the United States.

His attacks have ruptured the relationship between the two countries, stoked an intense anti-American feeling among many Canadians and prompted Canada to start finding ways to shift away from its once-reliable economic partner and find other countries to make deals with.

At the same time, Mr. Trump earlier on Thursday offered a reprieve to the United States southern neighbor and largest trading partner, Mexico.

The two countries agreed to keep talking about a potential trade deal for 90 more days, averting the heavier tariffs Mr. Trump had threatened to impose on Mexico just before they were set to begin.

The news of the pause, announced by Mr. Trump and President Claudia Sheinbaum of Mexico on social media, came after the two leaders spoke by phone on Thursday morning. It also followed months of painstaking negotiations between the two sides that had left many Mexicans apprehensive about what Mr. Trump would ultimately decide.

Mexico has so far managed to fend off many of Mr. Trumps threats and forged somewhat improbably, analysts say a relationship of respect with him. More and more, we are getting to know and understand each other, Mr. Trump said on Thursday on social media.

But Canadas efforts to achieve a deal ahead of a Friday deadline Mr. Trump had set for raising tariffs on countries across the globe failed. Instead, the tariff on the United States second-largest trading partner is now set to rise to 35 percent from 25 percent.

The new levies do contain exclusions goods that meet the definition of North American products under a preexisting trade agreement among the United States, Canada and Mexico, will be exempt from tariffs. RBC Economics estimates that covers about 94 percent of the items Canada exports.

Still, products like steels and automobiles that are crucial to Canadas economy will still face separate, heavy levies, and could lead to severe financial pain for Canada in the coming months.

Mr. Trump has taken a remarkably bellicose tone toward Canada, threatening the countrys sovereignty by saying that the country should become another U.S. state and accusing it of taking financial advantage of the United States for its defense.

On Wednesday, he criticized Canadas decision to recognize Palestinian statehood and tied it directly to trade by saying that Canadas move would make any deal harder to achieve.

Prime Minister Mark Carney did not immediately respond to Mr. Trumps imposition of the higher tariff rate and it is unclear if Canada would apply retaliatory measures. Canadas economy is heavily dependent on exports and Mr. Carney is now looking to make deals with other countries, while at the same time pursuing measures, including major infrastructure projects, that are meant to create a stronger domestic economy.

Mr. Carney had weeks ago seemed confident that he could reach a deal that struck down all of the Trump tariffs but more recently his self-assurance had dissipated and the possibility of an agreement had grown unlikely.

Our economics reporters  based in New York, London, Brussels, Berlin, Hong Kong and Seoul are digging into every aspect of the tariffs causing global turmoil. They are joined by dozens of reporters writing about the effects on everyday people.

For Mexico, the agreement announced on Thursday will keep in place the 25 percent tariff on all goods from Mexico not covered by the existing free-trade agreement between the United States, Mexico and Canada. That rate had been set to rise to 30 percent on Friday, the deadline Mr. Trump set for countries across the globe to strike deals or face import taxes of as much as 50 percent.

It was a very good agreement, and it puts our country in a very good situation, Ms. Sheinbaum told reporters, adding that mutual respect was key to achieving the extension. Within this new world trade order, we have the best possible agreement.

In exchange, Mr. Trump said on social media, Mexico had agreed to immediately terminate its other trade barriers outside of tariffs, of which there were many. Mexican officials said they were discussing such matters, including labor-related mechanisms and disputes involving intellectual property.

Mexico did not offer any additional concessions in its latest round of U.S. trade talks, Ms. Sheinbaum said, although future actions might involve reducing Mexicos trade deficit with the United States and increasing the investment of U.S. companies in Mexico.

This is not only an extension, her economy minister, Marcelo Ebrard, said during the news conference. It is a very advantageous position for Mexico, compared to any other country.

Mr. Trump has repeatedly made demands of Mexico, pushing Ms. Sheinbaum to do more to battle drug cartels and stop the flow of fentanyl and migrants toward the United States.

Ms. Sheinbaum said a security agreement, governing matters like intelligence sharing and curbing the movement of fentanyl precursors and illegal guns, could be signed as early as next week.

Mr. Trump imposed the 25 percent tariff on all Mexican goods in March, saying it was in response to illegal immigration and fentanyl trafficking. Days later, he agreed to suspend tariffs on any products that fell under the U.S.-Mexico-Canada Agreement. (In June, Mexican officials said that meant about 87 percent of Mexican exports were free of U.S. tariffs, in part because of the exception granted to goods traded under the trilateral deal.)

When Mr. Trump threatened to increase Mexicos tariffs to 30 percent earlier this month, he said the countrys officials had cooperated on immigration but had not done enough to stop cartels and fentanyl.

Earlier this week, he vowed that his Aug. 1 deadline would not be extended. Yet on Thursday, he reversed course.

The complexities of a Deal with Mexico are somewhat different than other Nations because of both the problems, and assets, of the Border, Mr. Trump said in his announcement.

I think he respects us, Ms. Sheinbaum said when asked about her relationship with Mr. Trump on Thursday. And we respect him like neighbors.

Mr. Trump said Mexico would continue to face his global 25 percent tariffs on cars, and 50 percent tariffs on steel, aluminum and copper. Mexico has been lobbying to have those reduced or removed.

The 90-day reprieve on the 30 percent tariffs is a positive result for Mexico and proof that the strategy of negotiation and not confrontation that President Sheinbaum has implemented is being recognized by President Trump, said Kenneth Smith Ramos, a former trade negotiator for Mexico.

However, he added, it was clear that Mexico and the United States were unable to reach a long-term agreement on eliminating the tariffs.

Its a positive accomplishment for the Mexican government to avoid the 30 percent tariffs. But I see it more as a 0-0 tie, he said. The uncertainty will remain at least for the next 90 days.

Ashley Ahn contributed reporting.