The Big Story 

President Trump, in his latest reversal on tariffs, signed off on exemptions for imports from Canada and Mexico that are covered under a 2020 North American trade agreement.

© The Associated Press

The move came hours after Trump said Mexican imports covered under the U.S.-Mexico-Canada Agreement (USMCA) would be exempted, and one day after he said auto imports included in the USMCA would not be subject to tariffs. The exemption also applies to auto parts used in the assembly of cars.

“USMCA-compliant goods will not have a tariff for the next month, until April 2. That includes autos, and the autos were the lead in getting this done, but also Canada and Mexico have done a good job offering us ever more work to prove to us they’re going to cut the fentanyl deaths,” Commerce Secretary Howard Lutnick said in a statement.

“On April 2, we’re going to move into the reciprocal tariff, and hopefully Mexico and Canada will have done a good enough job on fentanyl that this part of the conversation will be off the table, and we’ll move just to the reciprocal tariff conversation,” Lutnick added.

White House officials have argued Trump’s tariffs should be seen not through the lens of a trade war, but through the lens of a war against fentanyl, which kills thousands of Americans each year.

Still, the White House’s unpredictable approach to tariffs has rattled financial markets, with the Dow Jones Industrial Average, the Nasdaq composite and the S&P 500 all taking on losses earlier in the week. 

Trump has promised more tariffs coming down the pike and pledged to begin imposing reciprocal tariffs starting in early April on other nations that have duties on U.S. imports.

The Hill’s Brett Samuels has more here. 

Welcome to The Hill’s Business & Economy newsletter, I’m Aris Folley — covering the intersection of Wall Street and Pennsylvania Avenue.

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Tax Watch 

Welcome to Tax Watch, a new feature in The Hill’s Business & Economy newsletter focused on the fight over tax reform and the push to extend the 2017 Trump tax cuts this year.

Bessent: Tariffs will finance tax cuts for working class

In a Thursday speaking appearance before the Economic Club of New York, Treasury Secretary Scott Bessent defended President Trump’s tariff plans and said the income could be used to fund several of his campaign trail tax cut promises.

Tariff critics often call import taxes “regressive,” — or disproportionately felt by those with lower incomes — because low-income households typically spend a much higher proportion of their money on goods.

Higher-income households not only have enough money to weather the higher costs, critics argue, but also spend a smaller portion of their money on things subject to tariffs.

Bessent, however, insisted Thursday that Trump’s could not be regressive if they funded the elimination of taxes on tips, overtime wages, Social Security benefits and car loans.

“If you then use the income from tariffs … for those four policies, which President Trump put forward during the campaign, which all accrue to the bottom 50 percent of wage earners… I think that’d be great,” he said.

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