Trump pauses Mexico tariffs as last-ditch Canada talks continue
Donald Trump has backed down – for now – on his threats to hit imports from Mexico with tariffs but Canada is less hopeful about a similar reprieve.
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Donald Trump has backed down on his threat to hit imports from Mexico with tariffs, just hours before the punishing measure was due to be implemented.
But the Canadian government was pessimistic about their chances of securing a similar reprieve, as stock markets were rattled by the prospect of a North American trade war.
The US President agreed to delay the 25 per cent tariff on Mexican imports for a month after speaking to his counterpart Claudia Sheinbaum on Monday (local time), saying he was keen to “attempt to achieve a deal between our two countries”.
The Mexican President vowed to send 10,000 National Guard soldiers to the US-Mexico border, responding to Mr Trump’s push for both Mexico and Canada to stop the trafficking of the deadly synthetic opioid fentanyl into the US.
Ahead of the imposition of tariffs on Tuesday (local time), Mr Trump also finally spoke to Canadian Prime Minister Justin Trudeau for the first time since his inauguration, with another call planned several hours later.
Like Ms Sheinbaum, Mr Trudeau had threatened to retaliate with sweeping tariffs on US imports to Canada, with some Canadian states also hitting back by pulling American liquor and other products from shelves.
Mr Trump had authorised his long-promised tariff plan – also including 10 per cent tariffs on imports from China – over the weekend, prompting stocks to take a sharp dive when global markets opened on Monday (local time).
Car manufacturers with integrated supply chains across North America were at the heart of the sell-off.
Some losses were later recovered as Mr Trump delayed the tariffs on Mexico after a call with Ms Sheinbaum he described as “very friendly”.
His Mexican counterpart said they had struck a “good agreement”, as she also vowed to push to produce more goods in Mexico to help compete against China.
“Our teams will begin work today on two areas: security and trade,” Ms Sheinbaum said.
“I am sure that in this month we are going to give good results.”
Mr Trump’s National Economic Council director Kevin Hassett praised Mexico’s response while criticising Canada’s move to retaliate, saying it had “misunderstood” the measures.
“This is not a trade war. This is a drug war,” he said, characterising the tariffs as a move to create “a lot of leverage for the United States” to crack down on fentanyl trafficking.
However, some Republican senators broke 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.
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TRUMP SPEAKS TO TRUDEAU AMID TRADE WAR
Mr Trump said he had spoken to Mr Trudeau about the punishing tariffs he has levied on Canada, 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 pauses Mexico tariffs as last-ditch Canada talks continue
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