Image source, EPA

We've been talking a lot about tariffs this past week - here's a quick explainer on what they are and how they work.

Tariffs are basically a form of tax that's charged on goods imported from other countries.

The companies that bring the foreign goods into the country pay the tax to the government.

Typically, they are imposed as a percentage of a product's value. So for example, imposing a 20% tariff on Chinese goods means a product worth $10 (£7.76) would have an additional $2 charge applied to it.

Firms may choose to pass all - or some - of that extra cost on to customers.

The US has typically charged lower tariffs on goods than other countries. This means Trump's plan to impose reciprocal tariffs on other countries could lead to a sudden and sharp increase in the tax rates - and to the prices people pay at the checkout.

• What are tariffs and why is Trump using them?

Today's suspension of some tariffs imposed on Mexico comes a day after Donald Trump said he would temporarily spare carmakers from them too.

That exemption covered cars made in North America that comply with the continent's existing USMCA free trade agreement - you can read more about that in our previous post.

The announcement from the White House came even as the president continued to blast Canada for not doing enough to stop drugs from entering the US.

News of the relief helped to boost US shares, which closed higher on Wednesdayafter two days of declines that had wiped out gains the S&P 500 had seen since the presidential election in November.

The temporary suspension Mexico has been granted only covers goods that fall under the US-Mexico-Canada Agreement (USMCA).

It's a type of trade agreement - a deal between countries that details how goods are traded between them.

USMCA came into force back in 2020 - during Trump's previous term in office - and substituted the North America Free Trade Agreement (Nafta).

Trump had long sought to change Nafta, with the new deal giving the US greater access to Canada's dairy market, and allowing for extra imports of Canadian cars.

• Read here for more on the specifics of the USMCA trade deal

Mexican President Claudia Sheinbaum has thanked Donald Trump for pausing tariffs on most goods from her country, after they were imposed earlier this week.

"We had an excellent and respectful call in which we agreed that our work and collaboration has given unprecedented result," she says in a post on X in Spanish.

"We will continue to work together, especially around the issues of migration and security, which includes reducing the illegal crossing of fentanyl into the United States, as well as weapons into Mexico," she adds.

Sheinbaum also confirms that the suspension will run until 2 April.

Will Grant
Mexico correspondent

That is twice in as many months that Claudia Sheinbaum has managed to defer the imposition of tariffs on Mexican goods through a last-minute phone call to Donald Trump.

As with the first time, in February, she will receive plaudits from her supporters at home for her handling of President Trump, while publicly refusing to accept that Mexico hasn’t done enough to tackle fentanyl trafficking or undocumented immigration into the United States.

As well as relief in Mexico that a cross-border trade war has been postponed - at least for the time being - there is also a sense of exasperation at the Trump administration over the constant threat, counter-threat, negotiation and postponement of these tariffs.

From Sheinbaum's perspective, none of this is in keeping with the spirit of the USMCA regional free trade agreement - which Trump himself signed into force during his first term.

Jonathan Josephs
BBC business reporter

Canada is expecting an exemption of the "same nature" as Mexico has received from US tariffs, a Canadian government source has told the BBC.

It's expected that will be announced later today, despite President Trump attacking Justin Trudeau on social media, saying he's done a "terrible job" for Canada.

Earlier on Thursday, the US president announced that Mexico will not be required to pay tariffs on "anything that falls under the USMCA agreement", in a suspension that lasts until 2 April.

The USMCA trade deal - between the US, Mexico and Canada - was agreed by Trump in his first term and covers goods including dairy, lumber and cars. It came into force in 2020 and is due for review next year.

Image source, Reuters

While tariffs have been suspended on Mexico, Canadian Prime Minister Justin Trudeau says he believes his country will be in a trade war with the US for "the foreseeable future", even if breaks are made for "certain sectors".

Donald Trump has already said he would temporarily spare carmakers from a new 25% import tax, just a day after the tariffs first came into effect.

Trudeau says that discussions with officials within the Trump administration are ongoing, with the goal to get "all tariffs removed".

Donald Trump says he believes Canadian Prime Minister Justin Trudeau is using his country's tariff dispute with the US to "run again for prime minister".

Trudeau announced his resignation in January, and said he will stay in office until his party has found a new leader.

"Believe it or not, despite the terrible job he’s done for Canada, I think that Justin Trudeau is using the tariff problem, which he has largely caused, in order to run again for prime minister," Trump writes on his Truth Social platform.

"So much fun to watch!" he adds.

Image source, Reuters

Donald Trump says he chose to temporarily suspend tariffs on Mexico "as an accommodation, and out of respect for," the country's president, Claudia 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," he writes in a post on X.

"Thank you to President Sheinbaum for your hard work and cooperation!" he adds.

Alex Smith
Reporting from Washington DC

The US has given Mexico a temporary reprieve on tariffs, just a few days after they were imposed on goods entering from the country.

President Donald Trump says the move was "out of respect" for his Mexican counterpart - it's only a temporary suspension until 2 April, and only affects goods that come under a trade agreement between the two countries and Canada.

A Canadian government sources tells the BBC that Ottawa - which has also had tariffs imposed on it by the Trump administration - is expecting an exemption of the "same nature".

The move is the second climbdown in two days on tariffs imposed by the US president. The country's stock market fell following the initial tariff announcement just a few days ago, amid fears of an all-out trade war.

Stick with us and we'll bring you the latest.