Donald Trump has agreed to a 30-day pause on his tariff threats against Mexico and Canada as America’s two largest trading partners took steps to appease his concerns about border security and drug trafficking.
The pauses provide a cool-down period after a tumultuous few days that put North America on the cusp of a trade war that could have crushed economic growth, caused prices to soar and ended two of the United States’ most critical partnerships.
“Proposed tariffs will be paused for at least 30 days while we work together,” Canadian Prime Minister Justin Trudeau posted on Monday afternoon, saying his government would name a fentanyl tsar, list Mexican cartels as terrorist groups and launch a “Canada-US Joint Strike Force to combat organised crime, fentanyl and money laundering”.
There is a risk that the tariffs could still come into effect, leaving the global economy uncertain about whether a crisis has been averted or if a possible catastrophe could still be coming in the weeks ahead.
Mr Trump on Saturday had directed 25% tariffs on imports from Mexico and Canada, with another 10% tariff on Canadian oil, natural gas and electricity. He also ordered an additional 10% tax on imports from China.
All the tariffs were scheduled to start at midnight on Tuesday, and Canada and Mexico threatened retaliation, raising the prospects of a broader regional trade war.
The 10% tariff that Mr Trump ordered on China is still set to go into effect, though he planned to talk with Chinese President Xi Jinping in the next few days.
Mr Trump’s signing of tariff orders for the three nations set off alarms among investors, legislators, businesses and consumers. The taxes on imports, if sustained, could push up prices and sabotage growth, even as the president has suggested they are necessary to get other nations to stop illegal immigration, prevent fentanyl smuggling and treat the US, in his mind, with respect.
“I look forward to participating in those negotiations, with President Sheinbaum, as we attempt to achieve a ‘deal’ between our two Countries,” the president wrote on social media.
He said the talks would be headed by secretary of state Marco Rubio, secretary of treasury Scott Bessent, secretary of commerce nominee Howard Lutnick and high-level representatives of Mexico.
Ms Sheinbaum said she was reinforcing the border with 10,000 members of her country’s National Guard and that the US government would commit “to work to stop the trafficking of high-powered weapons to Mexico”.
In 2019, when Mexico’s government also avoided tariffs from Mr Trump’s administration, the government announced it would send 15,000 soldiers to its northern border.
But the outlook was different for Canada for much of Monday, only for an agreement to come together.
Asked on Monday afternoon what Canada could offer in talks to prevent tariffs, Mr Trump told reporters gathered in the Oval Office: “I don’t know.” He mused about trying to make Canada the 51st state of the US.
He also indicated that more import taxes could be coming against China: “If we can’t make a deal with China, then the tariffs will be very, very substantial.”
White House press secretary Karoline Leavitt told reporters that Mr Trump would speak with President Xi in the next couple of days and that the White House would provide a report on the discussion.
Mr Trump has continued to antagonise Canada in recent weeks. He used a Monday social media post to repeat his complaints that Canada has been uncooperative, despite decades of friendship and partnerships that range from the Second World War to the response to the 9/11 terrorist attacks.
“Canada doesn’t even allow U.S. Banks to open or do business there,” Trump posted. “What’s that all about? Many such things, but it’s also a DRUG WAR, and hundreds of thousands of people have died in the U.S. from drugs pouring through the Borders of Mexico and Canada.”
Financial markets, businesses and consumers are trying to prepare for the possibility of the new tariffs. Stock markets sold off slightly, suggesting some hope that the import taxes that could push up inflation and disrupt global trade and growth would be short-lived.
But the outlook reflected a deep uncertainty about a Republican president who favours tariffs, even saying the US government made a mistake in 1913 by switching to income taxes as its primary revenue source.
