Goods From Canada, Mexico Still Exposed to U.S. Tariffs, Despite Pause

Summary

WSJ What’s News – Episode Summary: "Goods From Canada, Mexico Still Exposed to U.S. Tariffs, Despite Pause"

Release Date: March 7, 2025
Host: Alex Osola
Publisher: The Wall Street Journal

---

Introduction

In this episode of WSJ What’s News, host Alex Osola delves into the ongoing complexities of U.S. tariff policies affecting goods from Canada and Mexico, explores the latest U.S. job market data, and discusses significant developments in various sectors, including defense, agriculture, and education. The episode provides listeners with a comprehensive analysis of how current policies and economic indicators are shaping the business landscape.

---

U.S. Labor Market Insights

Job Growth and Unemployment Rates

Alex Osola opens the episode by presenting the latest employment data released by the Labor Department. In February, the U.S. added 151,000 jobs—a figure slightly below economists' expectations of 170,000 but an improvement over January's 125,000 jobs. Concurrently, the unemployment rate edged up to 4.1% from 4%.

Discussion with Justin LeHart

To unpack these numbers, Osola speaks with WSJ economics reporter Justin LeHart.

• Decline in Federal Jobs: LeHart highlights a 10,000-job decrease in the federal government sector. He notes, "The hiring freeze that went into effect when Trump came into office may have led to increased attrition" (01:47), indicating early signs of government job cuts.

• Federal Reserve's Position: When questioned about the implications for the Federal Reserve, LeHart states, "Not at this point. We might see weakness in the months ahead" (02:25). He emphasizes the Fed's cautious stance amid mixed signals from the job market and inflation pressures due to tariffs.

---

Federal Reserve's Strategic Pause

Jerome Powell's Remarks

At a New York conference, Fed Chair Jerome Powell addressed the current economic climate:

• Policy Uncertainty: Powell remarked, "Uncertainty around the changes and their likely effects remains high" (03:10), underscoring the Fed's wait-and-see approach amidst significant policy shifts in trade, immigration, fiscal policy, and regulation.

• Economic Stability: Despite uncertainties, Powell affirmed, "the US Economy continues to be in a good place" (03:10), signaling confidence in the underlying economic fundamentals.

Market Reaction

Following Powell's comments, U.S. stock markets saw a positive uptick:

• Dow Jones: Increased by 0.5%
• S&P 500: Rose 0.6%
• Nasdaq: Gained 0.7%

However, these gains were tempered by the week's earlier tariff-related news, leaving the markets relatively subdued overall.

---

Impact of Tariffs on Canadian and Mexican Goods

Tariff Suspension and USMCA

President Trump announced a one-month suspension of tariffs on Mexican and Canadian products, contingent upon adherence to the U.S.-Mexico-Canada Agreement (USMCA). Implementing this pause has proven to be more intricate than anticipated.

In-Depth Analysis with Chao Dang

Economics reporter Chao Dang provides a detailed breakdown of the situation:

• USMCA Coverage: Approximately 45% of goods from Canada and Mexico enter the U.S. duty-free under USMCA. An additional 40% come tariff-free without needing to claim USMCA, while the remaining 15% still face tariffs due to either non-compliance or low tariff rates making it economically unfeasible to claim exemptions (06:10).

• Compliance Challenges: Dang explains, "For some products, it's going to be more complicated" (06:10). For instance, determining the origin of car components or ensuring labor wage standards adds layers of complexity for exporters.

• Business Dilemma: Companies in Canada and Mexico face tough choices: "Should they file the paperwork, should they not?" (07:46). The cost-benefit analysis of compliance versus paying tariffs leads to uncertainty and potential delays in decision-making.

• U.S. Implementation: On the U.S. side, Customs and Border Protection must overhaul their systems to accurately apply tariffs, risking legal challenges and operational inefficiencies (08:26).

Dang anticipates businesses will be "scrambling" in the coming months to navigate these complexities (07:46), highlighting the broader impact on international trade relations and supply chains.

---

Other Significant Developments

Justice Department Investigates Egg Prices

The Justice Department has launched an investigation into soaring egg prices, probing whether major producers colluded to inflate prices or restrict supply. Egg prices have doubled over the past year, leading to shortages in grocery stores. The United Egg Producers defend their efforts against issues like bird flu, while the Trump administration moves to hold producers accountable. A DOJ spokesperson declined to comment, and the investigation remains in early stages.

Federal Funding Cuts to Columbia University

President Trump’s administration is canceling roughly $400 million in federal grants and contracts to Columbia University. The cuts stem from allegations that the Ivy League institution failed to protect Jewish students adequately. Columbia is currently reviewing the administration's actions and has a 30-day period to address these concerns and potentially restore funding.

Shift in Parental Guidance: From Tech to Arts

In a segment featuring WSJ columnist Callum Borchers, the episode explores why parents are now encouraging their children to pursue arts over technology. This shift is attributed to recent tech sector layoffs, causing parents to reconsider the stability and viability of tech careers for the next generation. Borchers observes, "They’re second guessing that plan for their own little ones now" (10:30).

---

Upcoming Content

• Markets Wrap-Up: The following day’s episode will feature a comprehensive markets wrap-up, highlighting the week's financial movements.

• Building Influence Series: On Sunday, the podcast will conclude its special series on China's global infrastructure initiatives, examining the West's responses and President Trump's divergent strategies.

---

Conclusion

This episode of WSJ What’s News provides listeners with an in-depth look at the multifaceted issues surrounding U.S. tariffs on Canadian and Mexican goods, the state of the U.S. job market, and other pivotal events shaping the economic and political landscape. With expert insights and detailed analysis, the podcast equips its audience with the knowledge to understand and navigate these complex developments.

---

Notable Quotes:

• Chao Dang: "What we're going to see in the next month or so is businesses scrambling to figure out, well, should they file the paperwork, should they not?" (00:45)

• Justin LeHart: "The hiring freeze that went into effect when Trump came into office may have led to increased attrition." (01:47)

• Jerome Powell: "We do not need to be in a hurry and we are well positioned to wait for greater clarity." (03:10)

• Palmer Luckey: "We should be the world gun store... we need to be willing to sell them the weapons they need to make themselves into prickly porcupines." (04:38)

• Callum Borchers: "They're second guessing that plan for their own little ones now." (10:30)

---

Produced by Anthony Banci, with contributions from Michael Kasmides, Michael Lavalle, Aisha Al Muslim, Scott Salloway, Chris Insinsley, and Falana Patterson.

---

<small>Note: Timestamps are referenced as they appear in the transcript and correspond to specific content segments within the episode.</small>

Transcript

[Palmer Luckey]

More rewards, more savings with American Express Business Gold. Earn up to $395 back in annual statement credits on eligible purchases at select shipping, food delivery and retail subscription. Merchants enjoy the benefits of membership with the AMEX Business Gold. Card terms apply. Learn [e-mail] Business Gold AmEx Business Gold built for business by American Express.

[Alex Osola]

Uncertainty around trade policy keeps the Fed in a holding pattern on rates, plus which goods from Canada and Mexico are still exposed to US Tariffs? The answer is less straightforward than it might seem.

[Chao Dang]

What we're going to see in the next month or so is businesses scrambling to figure out, well, should they file the paperwork, should they not? What is the cost around filing the paperwork versus maybe just waiting for another month and seeing if Trump's policy changes again.

[Alex Osola]

And are egg producers engaged in foul play in setting prices? The Justice Department wants to find out. It's Friday, March 7th. I'm Alex Osola for the Wall Street Journal. This is the PM edition of what's News, the top headlines and business stories that move the world today. New data out from the Labor Department today shows that the US added 151,000 jobs in February. That's slightly below the gain of 170,000 jobs economists expected to see, but better than the 125,000 jobs added in January. The unemployment rate, which is based on a separate survey from the jobs figures, rose to 4.1% from 4%. To give us some insight behind the numbers, I'm joined now by WSJ economics reporter Justin LeHart. Okay, Justin, what stood out to you in this jobs report?

[Justin LeHart]

The first thing that stood out was we saw a decline in federal government jobs. We saw a decline of 10,000. And so economists don't think that the layoffs that we saw last month have really registered just because of when the Labor Department collects the data for the report. Those layoffs really hadn't happened yet. However, there was a hiring freeze. So it does suggest that the hiring freeze that went into effect when Trump came into office, that may have led to increased attrition. And so that's sort of the leading edge of some of the government job cuts that we expect to see.

[Alex Osola]

And of course, the big question every time we get a Dows report, does this change anything for the Fed?

[Justin LeHart]

Not at this point. We might see weakness in the months ahead. Most economists expect to see that this month the Fed can leave rates on hold as widely. Expect it to if you see deterioration in the job market that could lead to a cut. There is a complication, of course, with tariffs expected to raise prices, you could get inflation going one way, jobs going the other way. That puts the Fed in a very tough spot.

[Alex Osola]

That was WSJ economics reporter Justin lehart. Speaking at a conference in New York today. Fed Chair Jerome Powell said the central bank is comfortable with its wait and see approach to rate cuts as it digests the effects of changing policy.

[Jerome Powell]

Looking ahead, the new administration is in the process of implementing significant policy changes in four distinct areas, trade, immigration, fiscal policy, and regulation. It is the net effect of these policy changes that will matter for the economy and for the path of monetary policy. While there have been recent developments in some of these areas, especially trade policy, uncertainty around the changes and their likely effects remains high. As we parse the incoming information, we are focused on separating the signal from the noise as the outlook evolves. We do not need to be in a hurry and we are well positioned to wait for greater clarity.

[Alex Osola]

The Fed chair said that despite uncertainty, the US Economy continues to be in a good place. US Stocks turned higher today following Jerome Powell's remarks, but remained lower on the week after an onslaught of tariff related news. The Dow rose about half a percent, The S&P 500 went up around 0.6%, and the Nasdaq closed 0.7% higher. Previously on the show, we've talked about how a new guard of defense startups are trying to secure contracts from Trump's Pentagon. Anduril is one such company and its founder, tech veteran Palmer Luckey, was part of a minority in the tech sector that supported Trump during his first run for the White House. This week, Lucky joined our sister podcast Bold Names to talk about how he's trying to remake the government's approach to national security.

[Palmer Luckey]

The United States should not be the world police. We should be the world gun store. We need to stop sending our people overseas to die for other people's sovereignty. And we need to be willing to sell them the weapons they need to make themselves into prickly porcupines that nobody wants to step on, nobody wants to bite, nobody wants to take a bite of them.

[Alex Osola]

To hear more of the conversation with Lucky, check out the link to the Bold Names podcast in our show. Notes Coming up, what goods are actually affected by Trump's tariff? Pause. That's after the break.

[Palmer Luckey]

150 countries, more than a trillion dollars for dams, bridges, railways. China's building influence.

[Callum Borchers]

It really is important how big your friend's circle is.

[Palmer Luckey]

So what's Beijing getting from its big bets on infrastructure? You're going to find ways to cooperate economically that help China advance its interests. And what's the US Doing about the Western world?

[Chao Dang]

Has come up with only partial answers.

[Palmer Luckey]

Check out Building Influence Sundays on the Wall Street Journal's what's News podcast.

[Alex Osola]

Yesterday, President Trump suspended tariffs on Mexican and Canadian products for one month. But there's a catch. The deal only applies to goods that had been traded duty free under an existing trade agreement called the U.S. mexico Canada Agreement, or USMCA. Putting that into practice is actually less straightforward than it might seem. WSJ economics reporter Chao Dang breaks it down for us. Okay, Chao, what kinds of goods are covered by the usmca?

[Chao Dang]

We've got a really long list of goods. It could be Mexican TVs, air conditioners, avocados, tomatoes. But for some products, it's going to be more complicated. So, for example, if you take a car, you're going to have to look at what components and parts go into that car. Is the majority of that car made out of steel that is originating from North America? What percentage of the car's value comes from factories where workers earn at least $16 an hour? So the rules can get quite complicated quickly.

[Alex Osola]

And what proportion of goods coming into the US from Canada and Mexico qualify for the USMCA?

[Chao Dang]

Last year, analysts calculated that roughly 45% of goods entering the US from Canada and Mexico entered under USMCA. That is, they entered duty free because they fulfilled the requirements of the USMCA rules. And then outside of that, you had 40% of goods that were coming in tariff free simply because businesses didn't need to claim USMCA on those products. And then the remaining 15% faced tariffs for various reasons, either because the businesses didn't bother to claim for USMCA because they felt the process would be too complicated, or that the tariff rate for those products was extremely low. And so therefore businesses just decided to pay those tariffs.

[Alex Osola]

How easy is it for companies in Canada and Mexico who want to export to the US to be compliant with usmca?

[Chao Dang]

So when a company tries to apply for usmca, all they have to do is file the paperwork with authorities and check a box that says their product is compliant. Of course, then the authorities can come back and actually do a check. And if the product isn't compliant, the firm could face fees. So essentially what we're going to see in the next month or so is businesses scrambling to figure out, well, should they file the paperwork, should they not? What is the cost around filing the paperwork versus maybe just waiting for another month and seeing if Trump's policy changes again.

[Alex Osola]

How about on the US Side? Is it equally complicated?

[Chao Dang]

It's the US Customs and Border Protection officials that will be implementing Trump's rules, so they're going to have to be really reconfiguring a lot of things, including their electronic databases, to properly charge tariffs on products. It's really complicated and they could face a lot of legal challenges and headaches from businesses if they don't agree with what's being tariffed and what's not.

[Alex Osola]

That was Journal Economics reporter Chao Dang. Thanks, Chao.

[Chao Dang]

Thank you.

[Alex Osola]

In other news, the Justice Department has opened an investigation into the cause of soaring egg prices, including whether large producers have conspired to raise prices or hold back supply. That's according to people familiar with the matter. Egg prices have doubled over the past year, and eggs are sometimes entirely absent from grocery store shelves. The department's investigation is in its early stages and might not lead to any formal action. A Justice Department spokeswoman declined to comment. The United Egg Producers, a trade group for the industry, said egg farmers are, quote, doing everything they can to fight back against this deadly bird flu outbreak. And the Trump administration said it's canceling roughly $400 million in federal grants and contracts to Columbia University. The Ivy League school has come under scrutiny by the Trump administration for an alleged failure to protect Jewish students. A Columbia spokesperson said the school is reviewing the agency's moves and promised to work with the government to restore its funding. A person with knowledge of the discussions said the university will have a 30 day review period to address the government's concerns and potentially reinstate the contracts. And finally, were you someone who went to math camp? Maybe your parents signed you up for an extra computer course? It was probably because they saw science and tech as a good, solid career path. Now, though, parents are taking a different approach and pushing their kids towards the arts instead. WSJ columnist Callum Borchers told our Tech News Briefing podcast why parents are rethinking careers in tech for the next generation.

[Callum Borchers]

It's not just that kids all of a sudden develop this newfound interest in computer science. A big part of it is thinking, well, that's where the jobs are right? And it would be hard to say that those people or their parents have been wrong in recent years, except for maybe just the last couple very recent years where we see a spate of layoffs in the tech sector. And for the people who were maybe part of that generation, the millennial parents who now have kids of their own, maybe they went into tech because they thought that's going to be the safe, smart, lucrative career. They're second guessing that plan for their own little ones now to hear more.

[Alex Osola]

From Callum, check out today's episode of Tech News Briefing. And that's what's news for this week. Tomorrow you can look out for our weekly markets wrap up. What's news in markets. Then on Sunday, we'll have the final installment of our special series building Influence about China's trillion dollar global infrastructure program. This time we look at how the west has responded so far and how President Trump is taking a very different approach. That's on what's New Sunday. And we'll be back with our regular show on Monday morning. Today's show was produced by Anthony Banci with supervising producer Michael Kasmides. Michael Lavalle wrote our theme music. Aisha Al Muslim is our development producer. Scott Salloway and Chris Insinsley are our deputy editors. And Falana Patterson is the Wall Street Journal's head of news audio. I'm Alex Osola. Thanks for listening.