President Trump's Canada, Mexico border deals avert trade war for now

By Josh Wingrove, Brian Platt and Alex Vasquez 

President Donald Trump agreed to delay 25 per cent tariffs on Canada and Mexico for a month after both US neighbours agreed to take tougher measures to combat migration and drug trafficking at the border, warding off a continental trade war for now.    

 

Trump and Canadian Prime Minister Justin Trudeau announced their agreement Monday in separate social media posts, just hours before the two countries were due to begin placing tariff on hundreds of billions of dollars of each other’s exports.  

 

 

The US received a number of concessions from the Canadian government. Canada is appointing a new fentanyl czar, will list cartels as terrorists and join the US in creating a new “strike force” to fight organized crime, drug trafficking and money laundering, Trudeau said in a post on X.

 

Trudeau said he has also signed a new “intelligence directive” on organised crime and fentanyl. Canada is going ahead with a C$1.3 billion ($901 million) plan it announced in December to add more border security resources, including helicopters, the prime minister said. 

 

Trump declared victory while hinting that tough negotiations are still ahead. “I am very pleased with this initial outcome, and the Tariffs announced on Saturday will be paused for a 30 day period to see whether or not a final Economic deal with Canada can be structured,” said the president, who has taken aim at the US trade deficit with Canada.

 

Earlier, Mexican President Claudia Sheinbaum and Trump agreed that Mexico would send 10,000 National Guard officers to the border to help stem the flow of fentanyl and migration into the US, a key demand from Trump for it to avoid tariffs.

 

The White House, in a pair of executive orders, formally delayed the tariffs on Canada and Mexico to March 4.  

 

The US is still scheduled to impose an additional 10 per cent tariff on China, due to take effect at 12:01 a.m. on Tuesday, Washington time. Trump told reporters Monday that his administration plans to speak with China “probably over the next 24 hours,” raising the possibility of a reprieve. 

 

White House Press Secretary Karoline Leavitt later told Fox News that there’s a plan for Trump to speak with Chinese President Xi Jinping about “illegal Chinese fentanyl that is killing tens of thousands of Americans every single year.”

 

Brinkmanship 

The news takes the three North American trading partners back from the brink of a huge trade war, at least temporarily, that economists have said would hurt US growth, worsen inflation and possibly plunge Canada and Mexico into recession.

 

Still, Trump’s trade brinkmanship has unsettled one of the world’s largest trading blocs. Trade in goods and services between Canada and the US was about $920 billion in 2023, while trade between Mexico and the US was nearly $900 billion, according to data from the US Department of Commerce.   

 

“The uncertainty is enormous. Reliability and trustworthiness have been absolutely demolished,” Carla Hills, the former US Trade Representative, said on Bloomberg Television.  

The Canadian dollar surged more than 1 per cent on the news and traded at C$1.4418 per US dollar at 5:49 p.m. New York time, while the Mexican peso had jumped earlier in the day after its tariff reprieve.  

 

Trump signed an executive order on Saturday that imposed 25 per cent tariffs on nearly all Canadian exports to the US, aside from energy products that would face a lower 10 per cent duty.

 

Hours later, Trudeau promised a retaliation package that would have put 25 per cent tariffs on C$30 billion worth of US imports, starting Tuesday, and on another C$125 billion of American-made goods in 21 days. 

 

Provincial governments across Canada also announced retaliation. Several of them ordered the removal of American-made beer, wine and liquor from store shelves, and some announced they will make it difficult for US companies to get government procurement contracts.

 

There has also been a rise in grassroots retaliation from Canadians, including citizen-led social media campaigns urging the boycott of US goods, and loud booing of the US national anthem at hockey and basketball games in Canada.