Trump delays 25% tariffs on Canada, Mexico

U.S. President Donald Trump is delaying 25% tariffs on Canada and Mexico for a month after the countries promised to beef up their borders and tackle the organized crime behind fentanyl trafficking.

Canada is appointing a so-called fentanyl czar and boosting its recent $1.3 billion improvements on the border's surveillance and security, Prime Minister Justin Trudeau said on X Monday afternoon.

"We will list cartels as terrorists, ensure 24/7 eyes on the border, launch a Canada-U.S. Joint Strike Force to combat organized crime, fentanyl and money laundering," Trudeau said. "I have also signed a new intelligence directive on organized crime and fentanyl, and we will be backing it with $200 million. The proposed tariffs will be paused for at least 30 days while we work together."

On Monday morning, Mexico agreed to deploy 10,000 soldiers to its northern border. Mexico City and Washington also plan to use the month to hash out further arrangements. The tariffs against Canada and Mexico were planned for Tuesday.

Canada and the U.S., sharing the longest undefended border in the world, have backed from the brink of shattering a $1.3-trillion a year trade and security relationship that's stretches back to the time of fur skins and canoes. Much of it today is in natural resources like minerals, oil and lumber, and fully integrated auto and energy sectors. The potential impact on supply chains and Canadian exporters is hard to over-state. 

Gun talk 

Mexican President Claudia Sheinbaum said on X Monday the deal required American promises to prevent shipments of the assault weapons fortifying the drug cartels trafficking the fentanyl at the root of Trump’s complaints.

Authorities estimate fentanyl from Canada accounts for 1% of the amounts on American streets. It appeared the fentanyl complaint was a lever to extract financial gains from Canada and perhaps renegotiate the United States Mexico Canada Agreement, the successor to Nafta, ahead of a scheduled reassessment next year. 

"I am very pleased with this initial outcome," Trump said on Truth Social Monday afternoon. "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."

Shares in Ford and General Motors -- key companies in the cross-border auto sector -- gained in after-market trading by 1.6% and 2.3%, respectively. Mining and metals companies also rose.

Phone deals

The U.S. president spoke with Sheinbaum by phone on Monday as well as separately with Trudeau in the morning and again at 3pm ET. 

On Saturday, Trudeau matched Trump’s proposed 25% tariffs with Canadian duties on $155 billion of American goods. The tariffs on both sides are due to start on Tuesday. 

"We had a good talk in the morning, but I did ask him a couple of questions," Trump said early afternoon Monday from the Oval Office. "Did you know that the banks, American banks, are not allowed to do business in Canada? Can you believe that? And that's one of many things that we talked about, and I think we'll win most of the subjects." 

At mid-Monday, The New York Times cited an unnamed senior Canadian official saying it was unlikely Canada would enjoy a reprieve like Mexico. The Wall St. Journal, for the most part a Trump supporter, has called the impasse “The dumbest trade war in history.”