Trump Delays Tariffs on Mexico and Canada, With China Tariffs Poised to Take Effect
President Donald Trump announced Monday that he will delay for one month a 25% tariff on goods imported from Mexico and Canada scheduled to take effect at midnight, temporarily defusing a trade war with some of the U.S.’s largest trading partners. Trump’s 10% tariff on goods from China is still scheduled to take effect on Tuesday.
Trump spoke to Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau via telephone during the day, with both leaders agreeing to send roughly 10,000 troops to their respective borders to crack down on illegal migration and drug smuggling into the U.S. As part of the agreements, both nations will hold off on retaliatory tariffs of their own. In addition, Sheinbaum said that the U.S. has pledged to take steps to help reduce the flow of high-powered, American-made weapons into Mexico, while Trudeau vowed to appoint a “Fentanyl Czar” to fight drug trafficking as part of a $1.3 billion border plan.
In a marked shift in tone from recent trade-related saber rattling, Trump said on social media that he had a “very friendly conversation” with Sheinbaum that resulted in the tariff delay. Negotiations over the next month will be led on the U.S. side by Secretary of State Marco Rubio, Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick, with Trump and Sheinbaum participating as well.
Addressing Canada, Trump said he was “very pleased with this initial outcome,” adding that the announced tariffs would be delayed for 30 days “to see whether or not a final Economic deal with Canada can be structured.”
Trade war threat remains: This past weekend, following weeks of critical remarks aimed at the U.S.’s largest trade partners, Trump formally announced the imposition of 25% tariffs against Mexico and Canada and 10% tariffs on China and Canadian energy.
“The extraordinary threat posed by illegal aliens and drugs, including deadly fentanyl, constitutes a national emergency under the International Emergency Economic Powers Act,” the White House said Saturday.
Economic pain ahead? Although Trump has largely portrayed tariffs as powerful negotiating tools with no downsides — the U.S. was the richest it has ever been when tariffs were high in the 19th century, Trump has insisted — economists have warned that tariffs generally depress trade and hurt consumers by raising prices. Trump appeared to acknowledge some of those concerns this weekend.
“THIS WILL BE THE GOLDEN AGE OF AMERICA! WILL THERE BE SOME PAIN? YES, MAYBE (AND MAYBE NOT!),” Trump wrote on social media. “BUT WE WILL MAKE AMERICA GREAT AGAIN, AND IT WILL ALL BE WORTH THE PRICE THAT MUST BE PAID.”
Still, Trump continues to reject the notion that tariffs are harmful in the long run. Responding to an op-ed in The Wall Street Journal that referred to Trump’s threatened tariffs as the “Dumbest Trade War in History,” the president said that anyone who is “against Tariffs, including the Fake News Wall Street Journal, and Hedge Funds, is only against them because these people or entities are controlled by China, or other foreign or domestic companies.”
Trump added that loving tariffs goes hand in hand with loving America, and that the 19th century tariff regime in the U.S. “should have never ended, in favor of the Income Tax System, in 1913.”
China vows response: While stating that no one wins in a trade war, Chinese officials have vowed to take countermeasures if the U.S. imposes a new tariff on all imports from China, as scheduled. While those countermeasures were left undefined, China’s Ministry of Commerce said that it also plans to file a legal case with the World Trade Organization.
“The unilateral tariff increase by the United States seriously violates WTO rules,” the ministry said. “It is not only unhelpful in solving its own problems, but also undermines the normal economic and trade cooperation between China and the United States.”
However, as NBC News notes, the WTO no longer has the ability to try legal cases, following Trump’s block on appointing new judges during his first term in office.
What does Trump want? While Trump has declared that reducing drug trafficking and illegal immigration are his prime motivations in raising tariffs, critics have noted that one of his targets has little to do with either of those issues.
“This is ridiculous. Canada is not a real source of fentanyl, it's not a real source of immigrants, it's certainly not ripping us off,” economist Peter Morici, a former director of the Office of Economics at the U.S. International Trade Commission, told NPR. “The trade is based on comparative advantages, based on economic efficiency, and it makes us and them live better. ... It isn't clear what Trump really wants.”
More broadly, critics have wondered why Trump is threatening a trade war with allies like Canada and Mexico. One topic that keeps coming up is the expansion of U.S. borders, and Trump returned to that idea on Monday, though it’s not clear why. “What I’d like to see, Canada become our 51st state” so it can avoid tariffs, Trump said when asked what the country could do to avoid a trade conflict.
An administration insider told Politico that the broader economic issues involved in trade may be at least as important to Trump as the more immediate problems of drugs and migration, suggesting that the threat of a trade war is still very much in play. “He’s also going to want to see the movement on the deficit,” the unnamed insider said referring to Trump’s long-term goal of raising funds through tariffs to help pay for tax cuts and reduce the budget deficit. “I think for legal reasons they need to keep saying it’s about fentanyl and migration but they’re going to get into other issues as well. There’s no way the president is going to go, ‘The fentanyl problem is fine, no tariffs.’”