White House explains why Mexico-Canada trade needs fewer tariffs

Listen To Story Above

White House National Economic Council Director Kevin Hassett recently discussed the implications of trade tariffs with Canada and Mexico during an appearance on CNBC’s “Squawk Box,” emphasizing the significant role of U.S. components in North American trade.

Hassett highlighted the substantial trade volume between the United States and its North American neighbors, which amounts to nearly $1 trillion in imports. He elaborated on the administration’s decision to exempt USMCA-related trade following progress on fentanyl issues.

🚨🇺🇸🇲🇽 TRUMP REVERSES MEXICO TARIFFS after the US stock market faced $1.1 TRILLION in single-day losses. pic.twitter.com/ius4r6T96h

— Legitimate Targets (@LegitTargets) March 10, 2025

/div>

“[T]here’s a huge amount of trade, almost $1 trillion of imports between Canada and Mexico. And one of the things that we talked about from the beginning and then did after we saw some progress on fentanyl, is exclude the ‘USMCA stuff.’ The USMCA stuff is 50, 60% of all the trade in Canada and Mexico. And to get something qualified as a USMCA good, you just have to have U.S. content. So, if there [are] U.S. parts that get shipped over to Mexico, and then they assemble them into a car, then, if you put a tariff on that, then a lot of the tariff is on U.S. parts. That doesn’t make sense. And that’s why the exemptions are there.”

The Economic Council Director went on to explain how businesses might adapt to the new tariff landscape. He suggested that companies would have various options to respond once the final tariffs are established, particularly by increasing their use of U.S.-made components.

https://twittter.com/adgirlMM/status/1897711451680457106

“And so, I would expect that one of the things that’s going to happen is that people are going to have lots of levers that they can pull as the final tariffs are visible, and one of them is having more U.S. content, if you have more U.S. content, that will be quite helpful.”

In addressing the financial impact, Hassett provided reassurance by noting that even the highest estimates of tariff revenue would represent only a small portion compared to the tax cuts expected to be implemented by summer.