Trump postpones tariffs on most goods from Mexico for a month amid fears of damage to US economy

Trump lifted the tariffs until April 2 "out of respect" for the Mexican president, he said.

Tariffs came into force on Mexico, Canada and China earlier this week.

But on Wednesday Trump gave car manufacturers a one-month exemption on tariffs on imports from Mexico and China.

On Thursday, US commerce secretary Howard Lutnick said the one-month delay in the import taxes "will likely cover" all goods and services under the United States-Mexico-Canada Agreement, or USMCA, the trade agreement Mr Trump negotiated in his last term that replaced Nafta.

Read more: Trump gives car manufacturers one-month reprieve on tariffs

Read more: China says it is ‘ready for war’ with America as Trump tariffs come into effect

Mr Lutnick estimated that more than half of what the US imports from those two countries would be eligible for the exemption.

For companies with products that comply with the trade agreement "you will get a reprieve now", he said.

Canadian PM Justin Trudeau said Mr Lutnick's comments align with conversations Canadian officials have had with the Trump administration.

"But I am going to wait for an official agreement to talk about Canadian response or look at the details of it but it is a promising sign." Mr Trudeau said.

"But I will highlight that it means that the tariffs remain in place and therefore our response will remain in place."

Mr Trump's auto manufacturer announcement on Wednesday came after he spoke with leaders of Ford, General Motors and Stellantis, the parent company of Chrysler and Jeep.

His press secretary said Mr Trump told the chief executives to move car production to the US to avoid tariffs.

"We spoke with the big three auto dealers," Mr Trump said in a statement read by his spokesperson on Wednesday.

"We are going to give a one-month exemption on any autos coming through USMCA," referencing the North American free trade agreement he renegotiated in his first term.

Mr Trump's press secretary said the president is open to hearing about additional exemptions but Mr Trudeau is not willing to lift Canada's retaliatory tariffs if Mr Trump leaves any tariffs on Canada, a senior government official told the Associated Press.

"Both countries will continue to be in contact today," Mr Trudeau's office said.

Ontario premier Doug Ford earlier told the Associated Press the auto sector in the US and Canada would last approximately ten days before they start shutting down the assembly lines in the US and in Ontario.

Mr Trump's tariffs have stirred up bad blood among allies who see his aggression on trade as misguided.

The trade war is not necessarily a brief skirmish as the White House maintains that even harsher taxes on imports are coming in April, even as businesses and consumers worry that rising costs will crush economic growth, worsen inflation and result in lay-offs.

Still, the administration is grappling with the fallout of tariffs that could create serious blowback for his political mandate to lower prices.

Mr Trump has acknowledged that his tariffs could cause some financial pain, yet he has repeatedly said the tariffs will lead to more domestic investment and factory work.