Trump Pauses Tariffs on Mexico and Canada, But China Still Faces Looming Duties

U.S. President Donald Trump has suspended his threat of imposing steep tariffs on Mexico and Canada, reaching a 30-day pause in return for concessions on border and crime enforcement, as reported by Reuters. However, tariffs on China are still set to take effect within hours.

Both Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum agreed to bolster border enforcement efforts in response to Trump's demand to crack down on immigration and drug smuggling. This will pause the 25% tariffs that were scheduled to begin on Tuesday for a period of 30 days.

Canada has committed to deploying new technology and personnel along its border with the United States and launching cooperative efforts to combat organized crime, fentanyl smuggling, and money laundering. Mexico, on the other hand, has pledged to reinforce its northern border with 10,000 National Guard members to stem the flow of illegal migration and drugs.

"As President, it is my responsibility to ensure the safety of ALL Americans, and I am doing just that. I am very pleased with this initial outcome," Trump stated on social media.

The agreements prevent, at least for now, the outbreak of a trade war that economists predicted would negatively impact the economies of all involved and lead to higher consumer prices.

Following phone conversations with both Trudeau and Sheinbaum, Trump indicated he would attempt to negotiate economic agreements with the two major U.S. trading partners over the coming month. The economies of Canada, Mexico, and the United States have become deeply intertwined since the establishment of a landmark free-trade deal in the 1990s.

China Tariffs Remain Imminent

Unlike the agreements reached with Mexico and Canada, no such deal has emerged for China. China is facing across-the-board tariffs of 10% that are scheduled to begin at 12:01 a.m. ET on Tuesday (0501 GMT). A White House spokesperson revealed that Trump will not be speaking with Chinese President Xi Jinping until later in the week.

Trump warned that he might increase tariffs on Beijing further. "China hopefully is going to stop sending us fentanyl, and if they're not, the tariffs are going to go substantially higher," he said.

China has maintained that fentanyl is an American problem and has indicated its intention to challenge the tariffs at the World Trade Organization and implement other countermeasures. However, China has also left the door open for potential talks.

The latest developments have sent the Canadian dollar soaring after it reached its lowest point in over two decades. The news has also boosted U.S. stock index futures following a day of losses on Wall Street.

Industry groups, concerned about disrupted supply chains, welcomed the pause in tariffs on Mexico and Canada. "That's very encouraging news," said Chris Davison, head of a trade group representing Canadian canola producers. "We have a highly integrated industry that benefits both countries."

Trump hinted on Sunday that the 27-nation European Union might be his next target for tariffs, but did not specify a timeline. EU leaders meeting in Brussels on Monday stated that Europe would be prepared to retaliate if the U.S. imposes tariffs, but also called for reason and negotiation. The U.S. is the EU's largest trade and investment partner.

Trump suggested that Britain, which left the EU in 2020, might be spared from tariffs.

Trump acknowledged over the weekend that his tariffs could cause some short-term pain for U.S. consumers, but maintains that they are necessary to curb immigration and narcotics trafficking and to stimulate domestic industries.

Analysts have warned that the tariffs, as originally planned, could push Canada and Mexico into recession and trigger “stagflation” – high inflation, stagnant growth, and elevated unemployment – at home.