Trump Temporarily Suspends Mexico Tariffs, But Canada and China Tariffs Remain “`
In Washington, D.C., Presidents Trump and Sheinbaum agreed to a one-month delay on planned tariffs, allowing further negotiations. Mexico pledged to deploy 10,000 National Guard members to combat drug trafficking.
Tariffs against Canada and China remain scheduled for implementation, leaving uncertainty about the long-term impact and potential for wider trade conflict, as President Trump has indicated further import taxes are forthcoming.
The tariff pause followed what Trump called a “very friendly conversation,” with both leaders expressing optimism about upcoming discussions.
Trump stated that Secretary of State Rubio, Secretary of the Treasury Bessent, Secretary of Commerce Lutnick, and high-ranking Mexican officials would lead the negotiations.
President Trump stated his anticipation for collaborating with President Sheinbaum in these negotiations to reach a bilateral agreement.
President Sheinbaum outlined necessary border policy adjustments as a precondition for the talks, and Trump acknowledged Mexico’s troop deployment.
“Mexico will reinforce the northern border with 10,000 members of the National Guard immediately, to stop drug trafficking from Mexico to the United States, in particular fentanyl,” Sheinbaum announced on X. “The United States commits to work to stop the trafficking of high-powered weapons to Mexico.”
President Trump earlier reported speaking with the Canadian Prime Minister and planned a follow-up conversation. Both Canada and Mexico had planned retaliatory measures, but Mexico has temporarily suspended its response.
Trump reiterated his criticisms of Canada’s lack of cooperation, despite their long history of friendship and partnerships.
“Canada doesn’t even allow U.S. Banks to open or do business there,” Trump stated. “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 preparing for potential tariff impacts. Initial stock market reactions indicated some optimism that the tariffs, with their inflationary and disruptive potential, might be short-lived.
However, significant uncertainty remains about the President’s stance on tariffs, given his past advocacy and even suggesting that the 1913 shift to income tax was a mistake.
Trump previously stated that the tariffs would be lifted if Canada and Mexico strengthened their efforts against illegal immigration and fentanyl smuggling, though specific criteria remain unclear. He also insisted that the U.S. can no longer tolerate trade imbalances with its largest trading partners.
Mexico faces a 25% tariff, while Canada would face a 25% tariff on imports and a 10% tariff on energy products. China faces an additional 10% tariff due to its role in fentanyl production and distribution, according to the White House.
Kevin Hassett, director of the White House National Economic Council, downplayed the situation as a trade war, despite potential retaliations and escalation risks.
“Read the executive order where President Trump was absolutely, 100% clear that this is not a trade war,” Hassett said. “This is a drug war.”
Even if the focus is on drugs, Trump’s comments frequently highlight his belief that foreign countries exploit the United States through trade surpluses. He recently announced impending tariffs on the European Union. He has presented tariffs as a diplomatic tool for national security issues, a revenue-raising measure, and a means to renegotiate trade agreements.
Multiple outside economists have warned that the tariffs would increase prices and hinder growth, contradicting Trump’s past campaign promises to control inflation.
Joe Brusuelas, chief economist at RSM, stated that while a U.S. recession this year is unlikely, the tariffs would negatively impact growth and increase government borrowing costs, potentially raising mortgage and auto loan interest rates.
“If there is no resolution, the impact on the U.S. economy will be significant,” he said. “Growth will slow notably from the 2.9% average over the past three years as inflation and interest rates rise. The yield on the 10-year Treasury, currently around 4.5%, could climb to a range between 4.75% and 5%.”
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Sherman reported from Mexico City.