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Trump tariffs on Mexico & Canada suspended for 30 days after deal struck on drug trafficking

But tariffs against China look set to go ahead on Feb. 4.

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February 04, 2025, 11:23 AM

Telegram WhatsappFears of a neighbourly trade war between the United States, Canada, and Mexico appear to have receded on Feb. 3 (local time).

This comes as the U.S. has suspended the crushing 25 per cent tariffs after Mexico and Canada agreed to step up efforts to combat drug trafficking and border policing.

However, 10 per cent tariffs on China appear likely to continue, with U.S. President Donald Trump threatening to impose even more.

30 days

After his election in November 2024, Trump promised to issue eye watering 25 per cent tariffs on Canada and Mexico, in what some have termed the "dumbest trade war".

He justified this by claiming that neither was doing enough to help the U.S. combat the smuggling of illegal drugs such as fentanyl into the U.S.

In addition, he said that Mexico was not doing enough to help the U.S. stop immigrants illegally crossing its southern border.

But after a round of threats of retaliatory tariffs on Feb. 3, both Canada and Mexico have agreed to do more to address U.S. concerns about drug trafficking and the border.

As a result, the Trump administration has agreed to suspend tariffs for 30 days.

10,000 troops

Reuters reports that Canada’s Prime Minister Justin Trudeau has agreed to police the Canada-U.S. border using new technology and additional personnel, as well as cooperative efforts, to tackle organised crime operations responsible for drug trafficking and money laundering.

The Guardian reported that Mexican President Claudia Sheinbaum said on Feb. 3 that both sides had come to a “series of agreements” to pause tariffs and negotiate further.

Sheinbaum agreed to send 10,000 Mexican National Guard personnel to the border, to combat drug trafficking, but also managed to wrangle an agreement from the U.S. to attempt to prevent high-powered weapons from entering Mexico from the U.S.

Perhaps tellingly, Trudeau similarly announced that it would be deploying 10,000 personnel to the border to enforce its promise to restrict the trafficking of substances such as fentanyl.

The U.S. is undergoing a severe opioid crisis domestically, with fentanyl one of the most severely abused drugs in the country.

China tariff to continue

Trump’s tariff threat continues to loom for China, with its 10 per cent tariff due to kick in on Feb. 4.

The Trump administration blames China for being the origin of much of the illegally smuggled fentanyl.

While the two countries have grown increasingly more hostile towards each other, both economies remain highly integrated, with a 10 per cent tariff likely to have significant economic consequences.

China has denied responsibility for the fentanyl situation in the U.S., saying on Feb. 2 that it was “America’s problem”, but also said that both countries had “carried out extensive anti-narcotics cooperation”, achieving “remarkable results”, according to Reuters.

However, Reuters also claimed that China was willing to negotiate to soften the U.S. position, although that position has yet to bear fruit at the time of writing.

Meanwhile, China has said that it would lodge a complaint at the World Trade Organization, which Reuters described as a “symbolic gesture”, as well as take “countermeasures” should the tariffs come into effect on Feb. 4.

Initial outcome

Trump trumpeted what his tariff threats have achieved, saying on social media that he was pleased with the “initial outcome”.

Screenshot via Truth Social

But this likely signals only the end of the beginning of Trump’s tariff threats, with the Guardian reporting that Trump will likely train his sights on the European Union next.

It further reported that the EU’s leaders met informally on Monday, and while they said they would fight back against any new tariffs, also called for negotiation in order to head them off.

This likely signals what global reaction to tariffs will likely be: threats of retaliation followed by negotiations, and perhaps even concessions.

While the Guardian reports that Trump's initial tariff threats, not only against Mexico and Canada, but also with countries such as Venezuela, Colombia, and Panama, all appear to have achieved “tangible short-term results”.

But an expert that it spoke to warned that such tactics could possibly push these countries “closer to China” as the U.S. becomes “more transactional”.

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Top image via Donald Trump/Truth Social

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