In a last-minute “JK,” the US postponed blanket 25% tariffs on imports from Mexico and Canada yesterday, shortly before they were set to go into effect.
Mexico got its break after President Claudia Sheinbaum and Trump connected yesterday morning and reached an agreement pending a further deal. Mexico will send 10,000 troops to the US border to help stop northbound undocumented migrants and fentanyl contraband, and Trump will crack down on the smuggling of weapons into Mexico, according to Sheinbaum.
Later in the day, Canadian Prime Minister Justin Trudeau said that the planned tariffs on goods from his country would also be paused for 30 days, after a phone call with Trump. Trudeau agreed to strengthen border security, appoint a fentanyl czar, and increase anti-crime cooperation with the US through the creation of a joint strike force.
Neighbor trade war avoided (for now)
Though many US business groups opposed the tariffs and economists said Americans would’ve faced higher prices—particularly for cars and fuel—Canadian and Mexican producers stood to lose the most as around 75% and 80% of their exports respectively are US-bound. To give Americans a taste of their own medicine, Canada was prepping its own 25% tariffs on $106 billion of US imports and appealing to maple-leaf patriotism by urging citizens to switch to Canada-made products. Mexico also said it was ready to impose tariffs on US goods.
Yesterday’s phone diplomacy looks like an example straight out of a Trumponomics textbook of how to treat tariff threats as a bargaining chip. But a looming trade war between the US and its friendly neighbors—which even had Canadians abandoning politeness—shows that economic ties can’t be taken for granted no matter how tight they seem, according to Axios.
Meanwhile…A 10% import duty on Chinese imports that President Donald Trump ordered did kick in today. China has said it will dispute the tariffs with the World Trade Organization, but it has also signaled a willingness to negotiate—and Trump said yesterday he planned to speak with China within 24 hours.
Big picture: As Trump flexes the US’ economic muscles, America’s allies and adversaries around the globe are making a flurry of trade deals among themselves, per the New York Times. —SK