Mexico Secures One-Month Pause on U.S. Tariffs as Trade Disputes Intensify
IStock

Mexico Secures One-Month Pause on U.S. Tariffs as Trade Disputes Intensify

Tariffs on Canada and China Still Set to Begin Tuesday, Raising Economic Uncertainty

WASHINGTON — Mexican President Claudia Sheinbaum announced Monday that planned U.S. tariffs on Mexico have been put on hold for one month following a conversation with President Donald Trump. The White House confirmed the delay, while tariffs on imports from Canada and China remain scheduled to take effect on Tuesday.

As part of the agreement, Sheinbaum stated that Mexico will immediately deploy 10,000 National Guard members to its northern border to combat drug trafficking, particularly fentanyl. In exchange, the U.S. has committed to working on reducing the flow of high-powered weapons into Mexico.

Trump took to social media Monday to reiterate his dissatisfaction with Canada’s trade policies, claiming that the country has been uncooperative despite long-standing partnerships. “Canada doesn’t even allow U.S. banks to open or do business there,” he posted. “What’s that all about? Many such things, but it’s also a drug war, and hundreds of thousands of people have died in the U.S. from drugs pouring through the borders of Mexico and Canada.”

Tariffs and Economic Fallout

The U.S. is set to impose a 25% tariff on Mexican imports and an identical 25% tariff on Canadian imports, with an additional 10% tariff on Canadian energy products. China will also face a 10% tariff due to its alleged role in fentanyl production and distribution.

Financial markets and businesses are bracing for the potential economic impact of these tariffs, which could drive up inflation and disrupt global trade. Stock markets opened lower on Monday, reflecting uncertainty over how long the tariffs might remain in place.

While Trump has insisted that the tariffs are necessary to curb illegal immigration and drug trafficking, he has also framed them as a tool to correct trade imbalances. “The U.S. can no longer afford to run massive trade deficits with our biggest partners,” Trump stated, adding that the tariffs would be lifted if Canada and Mexico strengthened their enforcement efforts.

Debate Over the Purpose of Tariffs

White House National Economic Council Director Kevin Hassett rejected claims that the move signaled a trade war. “Read the executive order—President Trump was absolutely clear that this is not a trade war,” Hassett said. “This is a drug war.”

Despite this assertion, Trump has frequently linked tariffs to economic policy, stating over the weekend that the U.S. should never have abandoned tariffs in favor of income taxes in 1913. He also warned that tariffs on European Union countries could be next.

Potential Economic Consequences

Economists have cautioned that prolonged tariffs could slow economic growth, increase inflation, and drive up interest rates. Joe Brusuelas, chief economist at RSM, noted that while a recession is unlikely this year, the tariffs could have significant consequences.

“If there is no resolution, the impact on the U.S. economy will be significant,” Brusuelas said. “Growth will slow notably from the 2.9% average over the past three years as inflation and interest rates rise. The yield on the 10-year Treasury, currently around 4.5%, could climb to a range between 4.75% and 5%.”

As negotiations continue, financial markets, businesses, and global leaders will be watching closely to see whether the U.S. moves forward with further tariff measures or if additional agreements can be reached.