Updated 08:55 IST, February 4th 2025
U-Turn: Donald Trump Pauses Tariffs On Mexico, Canada - Here's Why
President Trump has halted plans for steep tariffs on Mexico and Canada, opting for a 30-day pause to negotiate border and crime enforcement agreements.

US President Donald Trump has announced a temporary halt on imposing 25% tariffs on Mexico and Canada, opting instead for a 30-day pause to negotiate enhanced border and crime enforcement measures with both neighboring countries. The decision comes as part of ongoing efforts to address immigration and drug smuggling concerns, pivotal issues for the Trump administration.
Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum responded to Trump's demands by agreeing to bolster border security efforts. Trudeau pledged to deploy new technology and personnel along the US-Canada border, while committing to cooperative measures against organized crime, fentanyl smuggling, and money laundering. Mexico, on the other hand, agreed to reinforce its northern border with 10,000 National Guard members to curb illegal migration and drug trafficking.
Trump Pauses Tariffs on Mexico and Canada
Trump expressed satisfaction with the initial outcomes, stating on social media, "As President, it is my responsibility to ensure the safety of ALL Americans, and I am doing just that. I am very pleased with this initial outcome."
The agreements effectively delay the onset of potential trade conflicts that economists had warned could damage the economies of all involved and increase consumer prices. The tariffs, originally slated to take effect on Tuesday, have been postponed pending further negotiations aimed at strengthening economic ties between the United States and its largest trading partners.
However, amidst these developments, tariffs on China remain on schedule. The Trump administration plans to implement across-the-board tariffs of 10% on Chinese imports, beginning at 12:01 a.m. ET on Tuesday. Despite ongoing trade tensions, no similar agreement has emerged with China, prompting concerns about escalating economic disputes.
A White House spokesperson confirmed that President Trump would not engage in direct talks with Chinese President Xi Jinping until later in the week. Trump has indicated a willingness to escalate tariffs on Beijing further if China fails to address US concerns, particularly regarding fentanyl trafficking.
"China hopefully is going to stop sending us fentanyl, and if they're not, the tariffs are going to go substantially higher," Trump remarked, underscoring the administration's stance on tackling narcotics trafficking and other trade imbalances.
The announcement regarding Mexico and Canada provided a boost to financial markets, with the Canadian dollar rebounding after a period of decline, and US stock index futures showing signs of recovery following earlier losses on Wall Street.
Industry groups have expressed cautious optimism about the tariff delay, emphasizing the importance of maintaining stable supply chains. Chris Davison, head of a Canadian trade group representing canola producers, described the news as "very encouraging," highlighting the interdependent nature of the North American trade ecosystem.
Looking ahead, Trump hinted at potential tariff measures against the European Union, while sparing Britain from immediate tariffs post-Brexit. European leaders have responded cautiously, signaling readiness to retaliate against US tariffs while advocating for dialogue and mutual understanding in trade relations.
Despite acknowledging potential short-term challenges for US consumers, Trump defended the tariffs as necessary measures to safeguard national security interests and promote domestic industries. Analysts, however, caution that the proposed tariffs could lead to economic stagnation and inflationary pressures, particularly in Canada and Mexico.
The original tariff plan would have covered nearly half of all US imports, posing significant challenges for domestic manufacturing capabilities in the short term, according to ING analysts.
In conclusion, while the temporary tariff pause with Mexico and Canada offers a reprieve, ongoing uncertainties persist surrounding US trade policies and their global implications. The coming weeks are likely to be pivotal as negotiations continue to unfold, shaping the future landscape of international trade relations.
(With Inputs From Reuters)
Published 08:54 IST, February 4th 2025