President Donald Trump has agreed to delay 25 percent tariffs on Canada and Mexico for a month after both U.S. neighbors agreed to take tougher measures to combat migration and drug trafficking at the border, averting a trade war on the continent.
Bloomberg reports.
Canada, U.S. reach deal to avoid trade war
Trump and Canadian Prime Minister Justin Trudeau announced their agreement in separate social media posts late Washington time Monday, with the Canadian government making a number of concessions. Canada will appoint a new fentanyl chief, designate cartels as terrorists and create a joint US “strike force” to combat organized crime, drug trafficking and money laundering, Trudeau said on social media X.
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Trudeau said he also signed a new intelligence directive to combat organized crime and fentanyl. The prime minister said Canada was continuing to implement a C$1.3 billion ($901 million) plan announced in December to boost border security resources, including helicopters.
Trump declared victory but hinted that tough negotiations lay ahead.
— I am very pleased with this first result, and the tariffs announced Saturday will be suspended for 30 days to see if a final economic deal can be struck with Canada, — said the president, who has taken aim at the US trade deficit with Canada.
US, Mexico and Canada on the brink of trade war
Earlier, Mexican President Claudia Sheinbaum and Trump agreed that Mexico would send 10,000 National Guard officers to the border to help stop the flow of fentanyl and migrants into the U.S., a key demand by Trump to avoid tariffs.
The news brings the three North American trading partners back from the brink of a major trade war, at least temporarily, that economists say would hurt U.S. growth, worsen inflation and possibly tip Canada and Mexico into recession.
The Canadian dollar rose more than 1% on the news, trading at C$1.4418 per U.S. dollar at 5:49 p.m. New York time.
Trump signed an executive order on Saturday imposing 25 percent tariffs on almost all Canadian exports to the U.S., except for energy products, which would be subject to a lower 10 percent duty.
Hours later, Trudeau promised retaliatory measures that would impose 25 percent tariffs on C$30 billion worth of U.S. imports starting Tuesday and another C$125 billion on U.S.-made goods within 21 days.
Canada's provincial governments also announced retaliatory measures. Some have ordered American-made beer, wine, and liquor to be pulled from store shelves, and others have announced that they will make it more difficult for American companies to win government procurement contracts.
Canadians have also stepped up grassroots responses, including social media campaigns calling for boycotts of American products and loud booing of the U.S. national anthem at hockey and basketball games in Canada.
