By David Lawder and Aida Pelaez-Fernandez
(Reuters) -U.S. President Donald Trump gave Mexico a 90-day reprieve from higher tariffs on Thursday to negotiate a broader trade deal but was expected to issue higher final duty rates for most other countries as the clock wound down on his Friday deal deadline.
Trump was still negotiating deals with trading partners as the 12:01 a.m. EDT deadline approached, and he told a White House event he had “just made a couple of others a little while ago,” without giving details.
The president will issue higher tariff rates for scores of countries that have not negotiated trade deals by the deadline before midnight, White House Press Secretary Karoline Leavitt told a news conference.
The extension for Mexico avoids a 30% tariff on most Mexican non-automotive and non-metal goods compliant with the U.S.-Mexico-Canada Agreement on trade and came after a Thursday morning call between Trump and Mexican President Claudia Sheinbaum.
“We avoided the tariff increase announced for tomorrow,” Sheinbaum wrote in an X social media post, adding that the Trump call was “very good.”
Approximately 85% of U.S. imports from Mexico comply with the rules of origin outlined in the USMCA, shielding them from 25% tariffs related to fentanyl, according to Mexico’s economy ministry.
Trump said the U.S. would continue to levy a 50% tariff on Mexican steel, aluminum and copper and a 25% tariff on Mexican autos and on non-USMCA-compliant goods subject to tariffs related to the U.S. fentanyl crisis.
“Additionally, Mexico has agreed to immediately terminate its Non Tariff Trade Barriers, of which there were many,” Trump said in a Truth Social post without providing details.
But a deal with Canada, the second largest U.S. trading partner after Mexico, did not appear to be materializing late on Thursday, and U.S. Commerce Secretary Howard Lutnick said Trump’s prescribed 35% tariffs on Canadian goods not compliant with USMCA were still “surely in the cards.”
Trump had said Canada’s plan to recognize the state of Palestine in September had made a deal with Canada more difficult but hours later said it was “not a deal-breaker.”
He added that Canadian Prime Minister Mark Carney had called him on Thursday but the two leaders had not spoken.
KOREA DEAL, INDIA DISCORD
South Korea agreed on Wednesday to accept a 15% tariff on its exports to the U.S., including autos, down from a threatened 25%, as part of a deal that includes a pledge to invest $350 billion in U.S. projects to be chosen by Trump.
But goods from India appeared to be headed for a 25% tariff after talks bogged down over access to India’s agriculture sector, drawing a higher-rate threat from Trump that also included an unspecified penalty for India’s purchases of Russian oil.
Although negotiations with India were continuing, New Delhi vowed to protect the country’s labor-intensive farm sector, triggering outrage from the opposition party and a slump in the rupee.
Trump’s rollout of higher import taxes on Friday comes amid more evidence they have begun driving up consumer goods prices.
Commerce Department data released Thursday showed prices for home furnishings and durable household equipment jumped 1.3% in June, the biggest gain since March 2022, after increasing 0.6% in May. Recreational goods and vehicles prices shot up 0.9%, the most since February 2024, after being unchanged in May. Prices for clothing and footwear rose 0.4%.
TOUGH QUESTIONS FROM JUDGES
Trump hit Brazil on Wednesday with a steep 50% tariff as he escalated his fight with Latin America’s largest economy over its prosecution of his friend and former President Jair Bolsonaro, but softened the blow by excluding sectors such as aircraft, energy and orange juice from heavier levies.
The run-up to Trump’s tariff deadline was unfolding as federal appeals court judges sharply questioned Trump’s use of a sweeping emergency powers law to justify his sweeping tariffs of up to 50% on nearly all trading partners.Trump invoked the 1977 International Emergency Economic Powers Act to declare an emergency over the growing U.S. trade deficit and impose his “reciprocal” tariffs and a separate fentanyl emergency.
The Court of International Trade ruled in May that the actions exceeded his executive authority, and questions from judges during oral arguments before the U.S. Appeals Court for the Federal Circuit in Washington indicated further skepticism.
“IEEPA doesn’t even say tariffs, doesn’t even mention them,” Judge Jimmie Reyna said at one point during the hearing.
CHINA DEAL NOT DONE
U.S. Treasury Secretary Scott Bessent said the United States believes it has the makings of a trade deal with China, but it is “not 100% done,” and still needs Trump’s approval.
U.S. negotiators “pushed back quite a bit” over two days of trade talks with the Chinese in Stockholm this week, Bessent said in an interview with CNBC.
China is facing an August 12 deadline to reach a durable tariff agreement with Trump’s administration, after Beijing and Washington reached preliminary deals in May and June to end escalating tit-for-tat tariffs and a cut-off of rare earth minerals.
(Additional reporting by Doina Chiacu and Susan Heavey in Washington and Aftab Ahmed in New Delhi; Editing by Nick Zieminski and Daniel Wallis)
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