Trump pauses Mexico and Canada tariffs—again—as retailers begin to feel the heat

The news: President Donald Trump paused tariffs on most Canadian and Mexican imports until April 2, giving retailers and consumers yet another reprieve—albeit one that will do little to quell concerns about tariffs’ potential to upend the US economy.

• The delay will apply to all products covered under the USMCA free trade treaty, and follows a one-month tariff exemption granted to the auto industry.
• But tariffs are still on the table unless Mexico and Canada can demonstrate significant progress in their efforts to curb illegal immigration and drug trafficking.

Nothing’s certain except uncertainty: The sudden reprieve underscores the sheer impossibility of planning for tariffs—and other unpredictable Trump administration plans, like mass deportations and government layoffs. The lack of clarity leaves retailers unable to assess the impact of tariffs on their bottom lines, how to mitigate them, and the implications they might have for consumer confidence and spending.

However, some retailers are better equipped than others to handle the uncertainty.

• Larger retailers like Walmart and Target have more power to wring price concessions out of suppliers. But even that has its limits: Walmart’s efforts to get its Chinese partners to eat the cost of tariffs have been met with uncharacteristic resistance, Bloomberg reported.
• Other companies, like Chipotle and Abercrombie & Fitch, have diversified supply chains that minimize their exposure to China, Mexico, and Canada. However, that could pose risks if Trump follows through with plans for reciprocal tariffs.

Immediate fallout: The trade war between the US, Mexico, and Canada has had swift repercussions for retailers and consumers.

• Canadian stores removed US liquor from shelves, a move that Brown-Forman CEO Lawson Whiting called “worse than a tariff.”
• Target threatened to raise grocery prices within a few days due to tariffs on Mexican produce, while Best Buy similarly warned that consumers would bear the brunt of higher import costs.

And while the North American front may be safe (for now), tariffs on China imports remain, along with retaliatory levies of 10% to 15% from Beijing targeting the US agricultural industry. Trump’s determination to use tariffs as blunt-force negotiation tools means they could be ramped up or paused at any time, leaving retailers and consumers with the perpetual feeling that the rug could be pulled from under them.

Our take: To say that the outlook is challenging for US brands and retailers is an understatement. Still, companies can make a number of moves to limit their exposure to tariffs and reassure wary consumers.

• Emphasize brand value. Companies should focus on what makes their offering unique—be it price, quality, or something else—to keep shoppers locked in and limit trade-down behaviors.
• Diversify supply chains. Retailers should seize this moment to broaden their supplier networks—and consider setting up local manufacturing hubs—to reduce the possibility of future shocks.
• Dust off the inflation playbook. With consumers once again highly attuned to rising prices, companies need to show that they’re aware of shoppers’ concerns and are doing all they can to offer value.

Go further: Listen to our latest podcast episode on the impact of tariffs and how retailers can prepare, or read how tariffs will impact the payments industry.