Trump backs down on Canada tariffs after Mexico backflip
Canada has announced that US tariffs are on hold for 30 days after Justin Trudeau held a “good phone call” with Donald Trump.
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Canada and Mexico have been spared from Donald Trump’s tariffs, with the US President pausing what loomed as a North American trade war just hours before it was due to begin.
Both countries secured a 30-day reprieve in exchange for measures to tighten border security, after Mr Trump declared over the weekend that he would hit their exports to the US with punishing 25 per cent tariffs.
The tariffs were due to kick in on Tuesday (local time), but after the President’s announcement roiled stock markets worldwide, he backed down in last-ditch negotiations with Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum.
Mr Trump had declared the tariffs – on two of America’s biggest trading partners – were necessary to force them to curb the influx of the deadly synthetic opioid fentanyl into the US.
In response, Ms Sheinbaum vowed to send 10,000 National Guard soldiers to the US-Mexico border in what she described as a “good agreement”.
She also promised to produce more goods in Mexico to help compete against China.
“I am sure that in this month we are going to give good results,” the Mexican President said.
Mr Trump, in a post on his Truth Social website, confirmed the 30-day pause on the Mexican tariffs and said he was keen to “attempt to achieve a deal between our two countries”.
After a call with Mr Trudeau on Monday (local time), Canadian officials had been pessimistic about their chances of securing a similar reprieve. And when Mr Trump was asked what he wanted from Canada, he said: “I’d like to see Canada become our 51st state.”
But the President also agreed to delay the tariffs on Canada after a second conversation with Mr Trudeau, who last month announced his resignation and will soon step down.
The Canadian Prime Minister reinforced his commitment to implement a $CA1.3bn plan to secure the Canada-US border with new technology and almost 10,000 frontline personnel.
He also vowed to appoint a new fentanyl czar, list drug cartels as terrorists, and deliver $CA200m for a new intelligence directive to tackle organised crime and fentanyl.
In response, Mr Trump said on Truth Social that Canada had agreed to “ensure we have a secure Northern Border, and to finally end the deadly scourge of drugs like Fentanyl that have been pouring into our Country, killing hundreds of thousands of Americans”.
“As President, it is my responsibility to ensure the safety of ALL Americans, and I am doing just that,” he said.
“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. FAIRNESS FOR ALL!”
Both countries had threatened to retaliate with tariffs of their own over the weekend, with some Canadian states even moving immediately to pull American liquor from the shelves.
Some Republican senators had also broken ranks to sound the alarm about the President’s plan, with Rand Paul declaring tariffs were “simply taxes” that would drive up prices for American consumers, and Susan Collins and Chuck Grassley also warning of the impact of tariffs on families and businesses in their states of Maine and Iowa.
Stocks took a sharp dive when global markets opened on Monday (local time), with car manufacturers with integrated supply chains across North America at the heart of the selloff, before a late rally as Mr Trump backed away from his threat.
But he was still set to impose a 10 per cent tariff on imports from China, after a more muted response from the Chinese government.
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MUSK SHUTS DOWN AID AGENCY
Elon Musk and US President Donald Trump have shut down the embattled U.S. Agency for International Development (USAID) after they agreed the organisation was “beyond repair”. Staff at the agency, tasked with humanitarian relief overseas, were shocked when they woke to emails telling them to stay out of the agency’s Washington DC headquarters.
The Tesla and SpaceX boss announced the closure in an audio-only appearance on X.
“It became apparent that it’s not an apple with a worm it in,” Mr Musk said of the international aid and development agency.
“What we have is just a ball of worms. You’ve got to basically get rid of the whole thing. It’s beyond repair. We’re shutting it down.”
The Trump administration intends to merge the agency with the US Department of State, CBS reports, in a plan that will involve a significant reduction in USAID’s funding and the workforce.
‘DRUG WAR’: TRUMP BLASTS CANADA
Mr Trump earlier said he had spoken to Mr Trudeau about the punishing tariffs, adding that they would talk again later in the day.
“Just spoke to Justin Trudeau. Will be speaking to him again at 3pm (7am AEDT),” Mr Trump said on his Truth Social network, while pushing his argument that the tariffs were about a “drug war” aimed at stopping the flow of fentanyl.
“Canada doesn’t even allow US Banks to open or do business there. 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 US from drugs pouring through the Borders of Mexico and Canada,” he wrote on Truth Social.
DOW REBOUNDS AFTER US DELAYS MEXICO TARIFFS
US Stocks rebounded just before noon on Monday local time (4am AEDT) after taking a sharp dive at the start of trading following Mr Trump’s decision to impose new tariffs on key US trading partners including China, Canada and Mexico — only for him to delay the levies following a conversation with the Mexican leader.
The Dow Jones Industrial Average, which dropped by as many as 560 points, recovered to around the break-even point as of 11:21am New York time on Monday.
The S&P 500, which had declined by as much as 1.6 per cent, was only down 0.55 per cent, or 33 points while the Nasdaq, which lost 1.95 per cent to drop nearly 400 points after the opening bell, rebounded to 0.92 per cent which was down 172 points.
The tariffs could potentially impact companies with supply chains tied to North America. Markets around the world reacted to the news on Monday morning local time.
‘YOU’RE FIRED’: TRUMP CONTINUES GOVT CUTTING
Meanwhile, US Treasury Secretary Scott Bessent will temporarily head the Consumer Financial Protection Bureau, the agency said Monday local time, after Mr Trump fired its previous chief in a move likely to shake up the consumer watchdog.
Rohit Chopra, the former director of the CFPB who took an aggressive approach to regulation, said Saturday that his term had been concluded prematurely.
Mr Chopra was named to head the agency responsible for protecting consumers from unfair financial practices in 2021 and was due to serve a five-year term.
The departure signals a likely shift away from his approach towards enforcement and regulation.
Mr Bessent, a former hedge fund manager, won Senate approval to helm the Treasury Department last week.
He said in a statement that he looks forward to working with the CFPB to advance Mr Trump’s economic agenda.
The CFPB started operating in 2011 in the wake of the global financial crisis of 2008, but its regulations often drew pushback from organisations like banks and credit card companies.
Advocacy group Progressive Change Campaign Committee slammed Mr Chopra’s dismissal as “a direct giveaway to Wall Street,” accusing the president of having “caved into pressure.” Mr Chopra’s firing is the latest in a long line of dismissals as Mr Trump returned to the White House in January with an assertion that all government departments should be aligned with his political agenda.
He has promised, with his billionaire ally Elon Musk, to correct what he sees as the excesses of corporate regulation while drastically reducing public spending.
- with AFP
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Originally published as Trump backs down on Canada tariffs after Mexico backflip
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