Trump agrees to pause tariffs on Canada and Mexico after they pledge to boost border enforcement

[February 04, 2025]  By JOSH BOAK, ROB GILLIES and FABIOLA SÁNCHEZ

WASHINGTON (AP) — President Donald Trump on Monday agreed to a 30-day pause on his tariff threats against Mexico and Canada as America's two largest trading partners took steps to appease his concerns about border security and drug trafficking.

The pauses provide a cool-down period after a tumultuous few days that put North America on the cusp of a trade war that risked crushing economic growth, causing prices to soar and ending two of the United States' most critical partnerships.

“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,” Trump posted on social media. “FAIRNESS FOR ALL!”

Canadian Prime Minister Justin Trudeau posted Monday afternoon on X that the pause would occur “while we work together,” saying that his government would name a fentanyl czar, list Mexican cartels as terrorist groups and launch a “Canada-U.S. Joint Strike Force to combat organized crime, fentanyl and money laundering.”

The pause followed a similar move with Mexico that allows for a period of negotiations over drug smuggling and illegal immigration. The 10% tariff that Trump ordered on China is still set to go into effect as scheduled on Tuesday, though Trump planned to talk with Chinese President Xi Jinping in the next few days.

While the trade war feared by investors, companies and political leaders now seems less likely to erupt, that doesn't mean the drama over Trump's tariff threats has ended. Canada and Mexico bought some additional time, but Trump could easily renew his tariffs and already plans to announce taxes on imports from the European Union.

All of that leaves the global economy uncertain about whether a crisis has been averted or if a possible catastrophe could still be coming in the weeks ahead.

Trump on Saturday had directed 25% tariffs on imports from Mexico and Canada, with another 10% tariff on Canadian oil, natural gas and electricity. The U.S. president had repeatedly previewed these moves, yet they still managed to shock many investors, lawmakers, businesses and consumers.

Multiple analyses by the Tax Foundation, the Tax Policy Center and the Peterson Institute for International Economics showed that the tariffs could hurt growth, lower incomes and push up prices. But Trump repeatedly insisted — despite promises to curb inflation — that tariffs were necessary tools to get other nations to stop illegal immigration, prevent fentanyl smuggling and treat the United States, in his mind, with respect.

Trump and Mexican President Claudia Sheinbaum announced the monthlong pause on increased tariffs against each other after what Trump described on social media as a “very friendly conversation,” and he said he looked forward to the upcoming negotiations.

Trump said the talks would be headed by Secretary of State Marco Rubio, Treasury Secretary Scott Bessent, Commerce Secretary nominee Howard Lutnick and high-level representatives of Mexico. Sheinbaum said she was reinforcing the border with 10,000 members of her country’s National Guard and that the U.S. government would commit “to work to stop the trafficking of high-powered weapons to Mexico.”

In 2019, when Mexico’s government also avoided tariffs from Trump’s administration, the government announced it would send 15,000 soldiers to its northern border.

But for much of Monday, the outlook was worrisomely different for Canada, only for an agreement to come together.

A senior Canadian official said Canada was not confident it could avoid the looming tariffs as Mexico did. That’s because Canada feels as if the Trump administration has been shifting its requests of Canada more than it did for Mexico. The official spoke on condition of anonymity, having not been authorized to speak publicly.

Shipping containers are seen at the Atlantic Hub container terminal in Halifax on Monday, Feb. 3, 2025, one day ahead of imposed tariffs by U.S. President Donald Trump against Canada. (Darren Calabrese/The Canadian Press via AP)

Asked Monday afternoon what Canada could offer in talks to prevent tariffs, Trump told reporters gathered in the Oval Office: “I don’t know." He mused about trying to make Canada the 51st state, part of ongoing antagonism despite decades of friendship with Canada in a partnership that has ranged from World War II to the response to the 9/11 terrorist attacks.

The U.S. president also indicated that more import taxes could be coming against China: “If we can’t make a deal with China, then the tariffs will be very, very substantial.”

Financial markets, businesses and consumers on Monday were still trying to prepare for the possibility of the new tariffs. Stew Leonard Jr., president and CEO of Stew Leonard’s, a supermarket chain that operates stores in Connecticut, New York and New Jersey, said his buyers were considering stocking up on Mexico's Casamigos tequila ahead of the tariffs and switching from Canadian to Norwegian salmon.

Stock markets sold off slightly, suggesting some hope that the import taxes that could push up inflation and disrupt global trade and growth would be short-lived. Trump even inquired Monday how the financial markets were doing as reporters were leaving the Oval Office.

The situation reflected a deep uncertainty about a Republican president who has talked with adoration about tariffs, even saying the U.S. government made a mistake in 1913 by switching to income taxes as its primary revenue source.

Kevin Hassett, director of the White House National Economic Council, said Monday that it was misleading to characterize the showdown as a trade war despite the planned retaliations and risk of escalation.

“Read the executive order where President Trump was absolutely, 100% clear that this is not a trade war,” Hassett said. “This is a drug war."

But even if the orders are focused on illegal drugs, Trump's own remarks have often been more about his perceived sense that foreign countries are ripping off the United States by running trade surpluses. On Sunday, Trump said that tariffs would be coming soon on countries in the European Union.

On Monday afternoon, he suggested a willingness to keep using tariff threats because the size of the U.S. economy as the world's largest made them effective.

“Tariffs are very powerful both economically and in getting everything else you want,” Trump told reporters. "Tariffs for us, nobody can compete with us because we're the pot of gold. But if we don’t keep winning and keep doing well, we won’t be the pot of gold."

Jaime Bricker, the tourism director for Skagway, Alaska, said visitors from Canada are an important part of her community's economy and the uncertainty around the tariffs has been difficult.

She recently was in Vancouver, Canada, for a tourism event, and many people she encountered — from cab drivers to wait staff — expressed concerns that the exchange rate and any tariffs could make it difficult to visit the U.S.

“It seems to be a fluid situation and it’s difficult to know just how impactful it will be without knowing for certain what could come in the days ahead,” she said.

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Gillies reported from Toronto, and Sánchez reported from Mexico City. Associated Press writers Anne D’Innocenzio in New York and Becky Bohrer in Juneau, Alaska, contributed to this report.

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