Mexico City, Mexico/Washington DC, US/Brussels, Belgium
Reuters
US President Donald Trump backed away from his threat to impose steep tariffs on Mexico and Canada on Monday, leaders of those countries said, but US tariffs on China were still due to take effect within hours.
Both Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum said they had agreed to bolster border enforcement efforts in response to Trump’s demand to crack down on immigration and drug smuggling. That would pause 25 per cent tariffs due to take effect on Tuesday for 30 days, both leaders said.
US President Donald Trump looks on, on the day he signs an executive order in the Oval Office at the White House in Washington, US, on 31st January, 2025. PICTURE: Reuters/Carlos Barria/File photo
Trudeau said Canada would deploy new technology and personnel along its border with the United States to stop the flow of fentanyl. There was no immediate confirmation from the White House, but Trump told reporters that a phone call with Trudeau went “very well.”
Mexico agreed to reinforce its northern border with 10,000 National Guard members to stem the flow of illegal migration and drugs.
The agreement also includes a US commitment to prevent trafficking of high-powered weapons to Mexico, Mexican President Claudia Sheinbaum said on X. The two leaders spoke by phone on Monday, just hours before US tariffs on Mexico, China and Canada were set to take effect. Economists say the steep levies would cause widespread economic harm, including increased prices for US businesses and consumers.
The US and Mexico will use the month-long suspension to engage in further negotiations, Trump said on social media.
“I look forward to participating in those negotiations, with President Sheinbaum, as we attempt to achieve a ‘deal’ between our two Countries,” he wrote on Truth Social.
“We have this month to work and convince each other that this is the best way forward,” Sheinbaum said at a press conference.
The agreement came less than 48 hours after Trump announced sweeping tariffs on goods from the top three US trading partners, accounting for $US2.1 trillion of annual commerce. The about-face was emblematic of the often chaotic nature of the early days of his second presidency.
Trump warned on Monday he might increase tariffs on Beijing beyond the 10 per cent he imposed and that he would discuss the matter with the Chinese government’s leadership in the next day or so.
“China hopefully is going to stop sending us fentanyl, and if they’re not, the tariffs are going to go substantially higher,” he said.
The tariffs on China remain poised to begin at 12:01am on Tuesday.
The latest twist in the saga sent the Canadian dollar soaring after slumping to its lowest in more than two decades. The news also gave US stock index futures a lift after a day of losses on Wall Street.
Mexico’s President Claudia Sheinbaum delivers a speech at the National Palace, in Mexico City, Mexico, on 21st January, 2025. PICTURE: Reuters/Henry Romero/File photo
EU next target?
Trump suggested on Sunday the 27-nation European Union would be his next target, but did not say when.
“They don’t take our cars, they don’t take our farm products. They take almost nothing and we take everything from them,” he told reporters.
EU leaders at an informal summit in Brussels on Monday said Europe would be prepared to fight back if the US imposes tariffs, but also called for reason and negotiation. The US is the EU’s largest trade and investment partner.
Trump hinted that Britain, which left the EU in 2020, might be spared tariffs, saying: “I think that one can be worked out”.
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Trump, who acknowledged over the weekend that the tariffs could cause some short-term pain for US consumers, nevertheless has argued the tariffs are needed to curb immigration and narcotics trafficking and spur domestic industries.
Trump’s tariffs would cover almost half of all US imports and would require the United States to more than double its own manufacturing output to cover the gap – an unfeasible task in the near term, ING analysts wrote.
A sign notifying customers that a store will stop selling US liquor from Tuesday, in response to US President Donald Trump’s imposition of tariffs on Canada, is displayed on a shelf carrying US alcohol in Winnipeg, Manitoba, Canada, on 2nd February, 2025. PICTURE: Reuters/Ed White
Other analysts said the tariffs could throw Canada and Mexico into recession and trigger “stagflation” – high inflation, stagnant growth and elevated unemployment – at home.
China called fentanyl America’s problem and said it would challenge the tariffs at the World Trade Organization and take other countermeasures, but also left the door open for talks.
– With reporting by STEFANIE ESCHENBACHER and BRENDAN O’BOYLE in Mexico City, Mexico; ANDREA SHALAL, DAPHNE PSALEDAKIS, DOUGLAS GILLISON, DOINA CHIACU and SUSAN HEAVEY in Washington DC, US; JARRETT RENSHAW in West Palm Beach, Florida; EAVEY IN WASHINGTON; JARRETT RENSHAW IN WEST PALM BEACH, FLORIDA; in Ottawa, Canada; KEVIN KROLICKI and QIAOYI LI in Beijing, China; JOSEPHINE MASON in London, UK; ALESSANDRO PARODI, CHARLOTTE VAN CAMPENHOUT, ANDREW GRAY, SUDIP KAR-GUPTA and GEERT DE CLERQ in Europe.
