Trump Delays Tariffs on Mexico and Canada, But China Still in the Crosshairs

US President Donald Trump has postponed the implementation of tariffs on Mexico and Canada for a month, following last-minute agreements with their leaders to tighten border security and combat drug trafficking. However, China remains a target for additional levies that continue to stir uncertainty in the global economy.

Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau reached agreements with Trump to enhance measures against migrant crossings and the smuggling of fentanyl into the United States. The move comes amid mounting concerns over a potential trade war, which had triggered a sharp decline in global stock markets due to the looming 25% tariffs on exports from Mexico and Canada.

Following what he described as "very friendly" discussions with Sheinbaum, Trump announced a temporary halt on Mexico-related tariffs. In return, Mexico committed to deploying 10,000 troops to its northern border. Meanwhile, tensions with Canada appeared more pronounced, but after multiple discussions with Trudeau, Trump confirmed via Truth Social that Canada had agreed to bolster northern border security and intensify efforts against fentanyl trafficking.

Trudeau stated that Canada would allocate nearly 10,000 frontline officers to border control, classify drug cartels as terrorist organizations, appoint a "Fentanyl Czar," and strengthen anti-money laundering initiatives. However, questions remain regarding the actual impact of these measures, as Canadian authorities had previously reported an 8,500-strong border deployment in December.

Market Reactions and China’s Position

Despite the Mexico deal, stock markets remained volatile. While Wall Street’s main indices initially plunged, they rebounded slightly following Trump’s announcement. Meanwhile, European markets in London, Paris, and Frankfurt closed lower.

China, on the other hand, is still set to face an additional 10% tariff increase on top of existing duties. Trump’s administration has scheduled last-minute negotiations with Beijing in hopes of reaching an agreement. White House spokesperson Karoline Leavitt confirmed that a conversation between Trump and Chinese President Xi Jinping was expected within the next 24 hours.

As the United States' three largest trading partners, Canada, China, and Mexico play a crucial role in shaping the economic landscape. The White House emphasized that ongoing discussions over the weekend had been extensive, with National Economic Council Director Kevin Hassett insisting that the tariff measures were primarily aimed at combating drug trafficking rather than triggering a trade war. However, US government data indicates that only a small fraction of illegal drugs enter through Canada.

Canada’s Backlash and Political Fallout

Canada had pledged to retaliate strongly against the tariffs. In response to Trump’s threats, Canadian citizens have booed the US national anthem at sporting events, canceled trips to the United States, and boycotted American products. Ontario, the country’s most populous province, moved to block US firms from bidding on billions of dollars in government contracts and scrapped an agreement with Elon Musk’s Starlink, a company linked to Trump.

Trump further escalated tensions by questioning Canada’s sovereignty, once again suggesting that the country could become the 51st US state. This controversy has fueled a political crisis in Canada, leading Trudeau to announce his resignation earlier this month, prompting early elections that could take place as soon as April.

Meanwhile, Mexico remains under pressure to tighten its border security as Trump pushes for a large-scale crackdown on undocumented immigration. The US president, who has frequently described "tariff" as his "favorite word," appears determined to double down on trade levies in his second term. While he continues to claim that foreign exporters will bear the economic burden, experts argue that American consumers are likely to feel the effects. Acknowledging potential fallout, Trump admitted upon returning from his Florida resort that US citizens might experience some economic "pain" as a result of his policies.