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Members of Mexico's National Guard queue to board a vehicle upon disembarking from a plane, after Mexican President Claudia Sheinbaum agreed with U.S. President Donald Trump to bolster border enforcement efforts in response to Trump's demand to crack down on immigration and drug smuggling, in Tijuana, Mexico, on Feb. 4, 2025.
HARD NUMBERS: Mexican troops head to the border, Carney promises defense binge, Critics call on Canada to suspend US agreement, Tariff talk tops tickers
7,000: Earlier this week, at least 7,000 Mexican troops were on their way to the US-Mexico border as part of Mexican President Claudia Sheinbaum’s deal with the Trump administration to postpone, for one month, the imposition of a 25% US tariff on all Mexican goods. Experts say that the deployment, meant to meet Trump’s demands that Mexico crack down on fentanyl traffickers and illegal migrants, represents a reshuffling among the tens of thousands of troops that Mexico already deploys throughout the country to tackle these issues.
2 in 5: Mark Carney, who is campaigning for the Liberal Party leadership, has pledged to meet a target of spending 2% of GDP on defense. That would be two years earlier than stipulated under current commitments made by outgoing Prime Minister Justin Trudeau. The matter has taken on fresh urgency in light of US President Donald Trump’s demands that NATO allies raise the benchmark to 5% of GDP – and his threats to annex Canada.
21: Immigration advocates and lawyers are calling on Ottawa to suspend a 21-year-old agreement with the United States under which Canada sends asylum-seekers apprehended at the border back into the US for processing. Critics say that the Trump administration’s recent moves to drastically restrict refugees’ access to asylum petitions fall afoul of international law, and they warn that Canada should not be complicit in these violations by sending people back to the US.
200: What’s the word among Wall Street analysts these days? Tariffs. Tariffs. Tariffs. So far this year, the term has come up at least once in more than 200 earnings calls with top companies listed on the S&P, a major stock index of American firms. The big question, of course, is how are companies planning to cope either with higher US tariffs themselves, or with the broader political and economic uncertainty about if, when, and how heavily Trump will use them.Mexico's President Claudia Sheinbaum holds a press conference in Mexico City, Mexico February 3, 2025.
Trump strikes last-minute tariff deal with Mexico and Canada – but not China
With hours to spare, President Donald Trump hit pause 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 Canada appointed a fentanyl czar and committed to a Canada-US Joint Strike Force targeting drug trafficking and organized crime.
There was no movement, however, with Beijing. Ten percent tariffs on Chinese imports took effect at 12.01 a.m. on Tuesday, prompting China to hit back with additional tariffs (both countries already had some tariffs in place) on liquefied natural gas, coal, farm machinery, and various other US products. Beijing also imposed new export restrictions and launched an antitrust investigation into Google. Earlier, Beijing said it would challenge the tariffs before the World Trade Organization.
Trump has also warned that tariffs on the EU are coming, prompting UK Prime Minister Keir Starmer to insist that Britain won’t pick sides between the US and the EU, despite 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 been speculation about Canada joining the EU, and there remains uncertainty about whether the United States remains 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.
Canada's Prime Minister Justin Trudeau is joined by Finance Minister Dominic LeBlanc, Minister of Foreign Affairs Melanie Joly, and Minister of Public Safety David McGuinty, as he responds to President Donald Trump's orders to impose 25% tariffs on Canadian imports, in Ottawa, Ontario, on Feb. 1, 2025.
Trump ignites trade war. Will there be a legal response?
On Saturday, US President Donald Trump signed an executive order applying 25% tariffs on all Canadian and Mexican imports, excluding Canadian energy, which will be tariffed at 10%. The order, which takes effect on Tuesday, also imposes a 10% tariff on all Chinese imports. Trump threatened to escalate tariffs further if any of the countries retaliated, which Mexico and Canada have already done.
Canada will apply 25% tariffs on $155 billion of American goods, from orange juice to appliances to car parts, phased in over three weeks. Ottawa will also consider nontariff measures relating to energy and procurement, and provincial liquor monopolies areremoving American alcohol from their shelves. Mexican President Claudia Sheinbaum also retaliated with “tariff and non-tariff measures in defense of Mexico's interests,” without specifying the rate.
China has responded with plans to implement “countermeasures” and called Trump’s tariffs a “serious violation” of international trade rules, which it will contest before the World Trade Organization.
On what basis did Trump issue the order? Trump expanded the scope of the national emergency he declared on Jan. 20 at the southern border of the United States, due to “the sustained influx of illicit opioids and other drugs” that is “endangering lives and putting a severe strain on our healthcare system, public services, and communities.” It now covers both Canada and China, which he accuses of not doing enough to combat fentanyl production, money laundering, drug gangs, and transnational crime.
Could legal challenges derail Trump’s tariffs? To declare this emergency, Trump invoked the US International Emergency Economic Powers Act, or IEEPA, the National Emergencies Act, or NEA, as well as sections 604 of the Trade Act of 1974 and section 301 of Title 3, United States Code.
But the IEEPA hasnever been used to justify tariffs. It allows for the imposition of sanctions, suchas those imposed by the Biden administration against Russia, which can be invoked immediately. Trump chose the IEEPA because it allowed him to bypass the lengthy investigations and consultations required by other trade laws he invoked during his first term.
It also allows him to claim the tariffs are legal under World Trade Organization rules, as the General Agreement on Tariffs and Trade’s Article XXI designates a national security exception. President Richard Nixon similarly invoked the Trading with the Enemy Act to impose 10% tariffs after the US quit the gold standard in 1971 to stave off a balance-of-payments crisis.
This may not bode well for a challenge by China before the WTO. But if American courts rule against Trump on his use of the IEEPA, his emergency declaration could be considered invalid, opening the door to penalties under global trade rules.
Finally, there’s the USMCA. A Congressional analysis found that tariffs would violate the tripartite treaty, but with Trump already threatening to withdraw from the agreement, it would appear he does not care. Trump said on Truth Social on Sunday that Americans will feel “SOME PAIN” but that “IT WILL ALL BE WORTH THE PRICE THAT MUST BE PAID.”
We’ll be watching to see who might challenge the US president in court – and whether they succeed. Meanwhile, the markets were taking a hit as of early Monday with stock futures lower and the dollar and oil rising.
Migrants line up to leave the United States for Mexico after being deported across the Paso del Norte international border bridge after President Donald Trump promised mass deportation operation, as seen from Ciudad Juarez, Mexico, on Jan. 23, 2025.
How Mexico is preparing for Trump’s mass deportations
The initiative, called “Mexico Embraces You,” aims to build nine migrant reception centers along the US border, and employ all 34 federal agencies and 16 state governments to repatriate and resettle returnees. The program intends to enroll people in pensions, paid apprenticeships, and other social welfare initiatives, and to distribute cash cards worth about $100 each. It will also bus people back to their hometowns.
Critics say Mexico is ill-equipped to handle the influx and accuse it of benefiting from migrant remittances, which boost foreign exchange, domestic incomes, and economic growth, while lacking a system to support repatriation. Some wonder what migrants will do once they return since many fled because of violence or lack of opportunity.
Mexican President Claudia Sheinbaum has expressed disagreement with Trump’s “unilateral” mass deportation decision, but with the US planning to implement 25% tariffs to force Mexico to crack down on the border, and the flood of migrants seemingly on their way back regardless, she has little choice but to prepare her country to receive them.Container ships in front of the port of Bremerhaven.
How scared should the world be of Trump’s economic threats?
On Wednesday, President Donald Trump used his social media platform to threatenVladimir Putin with “high levels of Taxes, Tariffs, and Sanctions on anything being sold by Russia to the United States” unless he struck a bargain over Ukraine.
There’s just one problem: Russia has very little trade with the US. Americans imported just $2.8 billion in goods from Russia from Jan. to Nov. 2024, less than a tenth of the pre-war figure and less than 1% of all US imports over the same time period. The extensive sanctions already in place have hardly brought Moscow to its knees, and arguably benefited US rivals like China, Iran, and North Korea. It’s tough talk, but it’s not likely to push Putin to the table.
China is a different story. Trade with the US added up to an average of $54 billion per month in 2024, and the 60% tariffs Trump threatened to put on China on the campaign trail would cause severe damage to both economies. That may be why Trump is backing off the high sticker number and said Tuesday he is considering imposing at 10% tariffs on Chinese goods as soon as Feb. 1.
Now, 10% is a number that Beijing feels is much more manageable. China is experiencing price deflation — a really damaging phenomenon with one silver lining in that it could mean US consumers wind up paying about the same prices even if Trump hikes tariffs. The central government is also promising funds to stabilize the stock market in the face of potential tariffs and prevent investors from seeking safer shelter for their cash.
The fears are more real in Europe, where Trump threatened to impose tariffs without specifying a rate on Tuesday. Growth in the region’s most important economies is already stagnating, and even small barriers to trade with their most important partner will have serious consequences. Further economic troubles could empower far-right movements across the continent, which may suit Trump just fine. We have our eye on Germany, which will hold elections in precisely one month.
And don’t forget Canada and Mexico, which are staring down the barrel of 25% tariffs that Trump threatened on Tuesday as well. It’s creating a decidedly tense atmosphere in North America, with Canadian Prime Minister (for now) Justin Trudeau promising retaliation, which Mexican President Claudia Sheinbaum has hinted at as well.
The bottom line? You’re probably in for rising prices in the near future … unless everyone can come up with a reason for Trump to let them slide. We’re watching what Trump says when he speaks at the World Economic Forum in Davos on Thursday.
President Donald Trump talks with Canada's Prime Minister Justin Trudeau during a North Atlantic Treaty Organization Plenary Session at the NATO summit back in 2019.
Mexico and Canada mull trade maneuvers as Trump proposes “External Revenue Service”
Incoming US President Donald Trumpposted on Tuesday that he will create an “External Revenue Service” to oversee his planned trade tariffs, underlining his commitment to these policies – much to the chagrin of America’s neighbors.
“We will begin charging those that make money off of us with Trade, and they will start paying, FINALLY, their fair share,” wrote Trump.
The news came a day after Mexican President Claudia Sheinbaumlaid out a plan to decrease Mexico’s trade deficit with China in what was widely seen as an olive branch to Trump.
By aligning more closely with Trump against China, Sheinbaum hopes she can carve out a special exception for Mexico, and a stronger hand in renegotiations of the US-Mexico-Canada trade agreement. Her administration has already cracked down on the import of counterfeit goods from Asia and placed tariffs on Chinese e-commerce platforms Shein and Temu. She also plans to cut down on reliance on imports for textile and auto manufacturers based in Mexico — but whether that will spare her the wrath of the ERS is yet to be seen.
North of the border, meanwhile, outgoing PM Justin Trudeau is also working on a plan to defend Canada’s trade interests with the US. He will hold a cabinet retreat next week to hammer out a potential response to Trump’s tariffs.LOS ANGELES, CA - JANUARY 07: A wind-driven fire burns on January 7, 2025 in Los Angeles, California. Santa Ana wind is fueling wildfires in Los Angeles that have destroyed homes and forced the evacuation of thousands of people.
Politics inflamed amid California wildfires
As California’s most destructive wildfires continue to blaze across Los Angeles County, having killed 16 and displaced more than 166,000 residents, emergency response effortshave become politicized, both at home and abroad.
Actor James Woods, Tesla CEO Elon Musk, and right-wing political commentators have accused Los Angeles Fire Department Chief Kristin Crowley of prioritizing diversity, equity, and inclusion initiatives over firefighting essentials. In response, Crowley citeda $17.4 million budget reduction to the LAFD in 2025, affecting overtime staffing and essential programs. Los Angeles Fire Commission President Genethia Hudley-Hayes defended Crowley, arguing that the scale of the fires, high winds, and an empty reservoir that was under repair would have overwhelmed even a fully funded department. Meanwhile, California Gov. Gavin Newsom has called for an independent investigation into water supply failures.
While domestic politics is bitterly divided, on the international front the story is one of unity. Mexico and Canadahave sent firefighting equipment, including water bombers and personnel, despite President-elect Donald Trump’s promises of punitive tariffs against both countries.
Will the goodwill effort change hearts and minds in the Trump administration? Alberta Premier Danielle Smithposted to X that “Good neighbours are always there for each other in times of need, and we will assist our American friends in any way they need during this crisis.” She laterposted photos of herself meeting with Trump at Mar-A-Lago at the weekend, along with Canadian businessman Kevin O’Leary.
Mexico's President Claudia Sheinbaum shows a 1661 world map showing the Americas and the Gulf of Mexico in response to US President-elect Donald Trump's comments about renaming the body of water, during a press conference at National Palace in Mexico City, Mexico, on Jan. 8, 2025.
Hard Numbers: Ring of “América Mexicana,” Canada to the fire rescue, Students’ stingy stipends, Ghost crimes soar
418: What was the United States called before it was the United States? “Mexican America,” according to a 418-year-old map shown by Mexican President Claudia Sheinbaum at a press conference on Wednesday. “It sounds nice,” she said, “no?” The display was meant as a clapback to US President-elect Donald Trump’s proposal a day earlier to rename the Gulf of Mexico “the Gulf of America.”
2: Two Canadian planes are helping California to battle the massive wildfires currently raging near Los Angeles. The two Canadair CL-415s are specialized bombers that can fill their bellies with fresh or salt water to dump on fires. Canada has been sending firefighter aircraft to California seasonally for three decades.
9,500: If you want to do a PhD in biology or physics in Canada, you’d best be financially secure before you start. The average stipend for Canadian graduate students studying those subjects leaves them CA$9,500 (US$11,900) below the poverty line, according to a new study in the journal Nature. To keep pace with the cost of living, stipends would have to increase by 150%.
1,600: The United States is becoming a “ghost” town, at least when it comes to firearms. The number of privately made, untraceable “ghost guns” found at crime scenes each year surged from about 1,600 in 2017 to more than 27,000 in 2023, an increase of some 1,600%. Later this year, the US Supreme Court will rule on the legality of a Biden administration effort to crack down on these weapons.