Trump delays tariffs on Canada and Mexico, but not on China

Tuesday 04 February 2025 - 15:04

President Donald Trump has decided to delay the imposition of 25% tariffs on Canada and Mexico for 30 days, averting a potential trade conflict between the North American neighbors. After urgent discussions, Canadian Prime Minister Justin Trudeau agreed to bolster border security with the U.S. to curb migration and the fentanyl drug trade.

Trump also reached an agreement with Mexican President Claudia Sheinbaum, who pledged to send additional troops to secure the northern border in exchange for the U.S. limiting the flow of firearms into Mexico. However, a 10% tariff on Chinese imports went into effect, prompting China to retaliate with tariffs on several U.S. products, including coal, LNG, crude oil, and agricultural machinery.

Following these developments, Trump emphasized that the 10% tariff on China was only the beginning, warning that further measures could be implemented if no agreement is reached. The temporary agreement with Canada and Mexico, which aims to prevent tariffs for at least 30 days, was celebrated by both leaders.

Trudeau outlined a border plan worth $1.3 billion to enhance the fight against fentanyl trafficking and improve border security. The plan also includes appointing a "fentanyl czar" and launching joint operations with U.S. authorities. Canada's broader border security strategy involves increasing law enforcement coordination, sharing information, restricting traffic, and utilizing drones and Black Hawk helicopters for surveillance.

Earlier, Trump also paused tariffs on Mexican goods in return for Mexico deploying 10,000 National Guard troops to the border. This follows Mexico's previous commitment to send soldiers in 2019 to avoid tariffs under the first Trump administration.

Despite the temporary relief, economists warn that retaliatory tariffs may lead to higher prices for goods like cars, lumber, and food. The markets showed initial volatility before stabilizing following the tariff delay announcement.

In Canada, officials expressed cautious optimism, with some acknowledging that the trade threat had been temporarily diffused, while others, like the Premier of Ontario, remained wary of the long-term effects of ongoing tariff threats. Trump hinted that the European Union could be the next target for tariffs, with Britain possibly being spared.