The administration of U.S. President Donald Trump continues to backpedal on its import tariffs, saying now that it is likely to defer 25% import duties on Canada and Mexico for all goods and services covered by the existing North American trade agreement.
The United States-Mexico-Canada Agreement (USMCA), which was struck during Trump’s first term in office and replaced the previous North American Free Trade Agreement (NAFTA), covers most goods and services that are traded between the three countries.
In media interviews on March 6, U.S. Commerce Secretary Howard Lutnick said that the Trump administration is considering a major reprieve for America’s two largest trading partners by exempting Mexican and Canadian goods covered under the USMCA agreement. “I think it’s likely it will cover all USMCA-compliant goods and services,” said Lutnick in an interview with CNBC.
Stock Market Tanks
News that Trump is planning a widespread rollback of his 25% import tariffs on Canadian and Mexican goods and services comes a day after the U.S. president paused for one month the tariffs applied to the automotive industry, and after Trump also said he is considering an exemption for agriculture products that are traded between America, Mexico and Canada.
The backpedaling comes as the U.S. stock market declines sharply after the blanket tariffs were imposed on March 4. The blue-chip Dow Jones Industrial Average opened down nearly 500 points on March 6 and the technology-laden Nasdaq Composite index began the trading day down about 2%. The markets have since recovered somewhat on news that the Trump administration is easing up on its import levies.
The U.S. has also imposed import duties of up to 20% on Chinese goods, a move that the government in Beijing has vowed to respond to with reciprocal tariffs.
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