As Bloomberg reports, President Donald Trump will exempt Mexican and Canadian goods covered by the North American trade agreement known as USMCA from his 25% tariffs, offering major reprieves to the US's two largest trading partners.

The pause on the tariffs, which are related to illegal immigration and fentanyl tracking, will expire on April 2, according to Commerce Secretary Howard Lutnick. That is the date when the president is expected to start unveiling plans for so-called reciprocal duties on nations around the world as well as sector-specific duties.

"Hopefully Mexico and Canada will have done a good enough job on fentanyl that this part of the conversation will be off the table" when the new tariffs kick in, Lutnick said in a statement.

The White House estimates that 62% of Canadian imports will still be subject to the tariffs, most of which are energy products that are being tariffed at a 10% rate, and half of goods coming from Mexico. 

A White House official cautioned those proportions could change as importers rush to comply with the new rules.

Trump decided to pare back the tariffs after speaking to Mexican President Claudia Sheinbaum, Canadian Prime Minister Justin Trudeau and auto company executives.

As a reminder, we are at a critical level on the Trump Tariff 1.0 analog...

Update (1130ET): President Trump has confirmed what Howard Lutnick hinted at earlier. In a Truth Social post, Trump noted that Mexico ()not Canada) will be exampt from tariffs on USMCA-compliant goods until April 2nd...

After speaking with President Claudia Sheinbaum of Mexico, I have agreed that Mexico will not be required to pay Tariffs on anything that falls under the USMCA Agreement. 

This Agreement is until April 2nd. 

I did this as an accommodation, and out of respect for, President Sheinbaum. 

Our relationship has been a very good one, and we are working hard, together, on the Border, both in terms of stopping Illegal Aliens from entering the United States and, likewise, stopping Fentanyl. 

Thank you to President Sheinbaum for your hard work and cooperation!