With hours to spare, President Donald Trumphit the pause button on a North American trade war, reaching agreements with both Mexico and Canada to delay the imposition of 25% tariffs that had businesses and markets sweating.
The deals, brokered after multiple calls with Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum, postpone the application of tariffs by 30 days while both countries work to secure their borders with the United States. Mexico agreed to deploy 10,000 troops to curb drug smuggling and illegal immigration, while Canadaappointed a fentanyl czar and committed to a Canada-US Joint Strike Force targeting drug trafficking and organized crime.
There was no movement with Beijing, however. As of Feb. 3, China will still be facing the 10% tariffs on imports, whichit will be challenging before the World Trade Organization. Trump has also promised thattariffs on the EU will be coming, prompting UK Prime Minister Sir Keir Starmer to insist that Britain won’t pick sides between the US and the EU after his push for closer relations with the continent.
While Mexican and Canadian businesses and consumers breathe a sigh of relief, Trump's hardball negotiation tactics may negatively impact relations with both countries, particularly Canada, in the longer term. Canadian leaders have said they will actively pursue trade deals with other partners, there has beenspeculation about Canada joining the EU, and there remains uncertainty about whether the United Statesremains a trusted ally after Trump forcefully repeated his hope that Canada would become the 51st state – just an hour before his final conversation with Trudeau.
