WASHINGTON — Presidents Donald Trump will delay the implementation of punishing tariffs on Canada and Mexico for one month in exchange for the two countries sending added personnel to their U.S. borders.
Trump moved to impose 25% tariffs on Mexico and Canada and 10% tariffs on China over the weekend, prompting retaliatory tariffs from the countries that shook economists and Texas’ business community. Mexico is Texas’ biggest trading partner by a wide margin, followed by Canada and China. Trump asserted the tariffs were to compel Mexico and Canada into tamping down illegal border crossings. They were scheduled to go into effect Tuesday.
Trump said he would pause the tariffs in exchange for Mexico and Canada investing more in border security. Mexican President Claudia Sheinbaum plans to send 10,000 soldiers to the border “specifically designated to stop the flow of fentanyl, and illegal migrants into our Country," Trump said on social media.
Canadian Prime Minister Justin Trudeau will implement a $1.3 billion border plan that includes 10,000 personnel on the border — a plan Canada had announced last year — and create a "Fentanyl Czar" to tackle drugs entering the United States. Trudeau also plans a task force with the U.S. to target cross-border criminal organizations and a $200 million intelligence operation focused on organized crime and fentanyl.
Sheinbaum said the U.S. also committed to working toward ending arms trafficking into Mexico, a long-time priority for the Mexican government.
During the pause, Trump’s Secretary of State Marco Rubio and his pick for Secretary of Commerce, Howard Lutnick, will negotiate with their North American counterparts to find a lasting trade and security agreement. The U.S. Senate has not yet confirmed Lutnick’s nomination. He faces a vote in the Senate Commerce Committee on Wednesday.
“I look forward to participating in those negotiations, with President Sheinbaum, as we attempt to achieve a “deal” between our two Countries,” Trump posted on social media.
"As President, it is my responsibility to ensure the safety of ALL Americans, and I am doing just that. 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!" Trump continued in a social media post later Monday.
Trump and Sheinbaum announced the delay on tariffs between the U.S. and Mexico on Monday morning. The delay on tariffs against Canada followed a call between Trump and Trudeau on Monday afternoon.
Democrats denounced the entire exercise as betting the nation's economy for political theater. Mexico has already been sending its military to the border, said Sen. Ron Wyden of Oregon, the highest ranking Democrat on the Senate Finance Committee. Mexico "threw out a number knowing that all Donald Trump really wanted was a headline," Wyden said.
Texas is the biggest exporting state in the country, sending over $129 billion in goods to Mexico in 2023. Even many of Trump’s supporters in Texas, who praised him for his tax cuts and freer regulatory agenda, warned that tariffs would be punishing on the state’s economy. Tariffs typically increase inflation as importers increase prices for consumers to make up for lost profits. The average cost increase could be $1,250 per household, according to an estimate by the Budget Lab at Yale University, with middle-class households about three times as impacted as upper-income households.
"The economic evidence is clear," said Ernie Tedeschi, director of economics at Yale's Budget Lab. "Tariffs are a tax, and they are a tax that are ultimately paid by Americans."
The globalized nature of the supply chain means goods often cross borders multiple times before they reach their final consumers, potentially increasing tariffs even further.
Both Sheinbum and Trudeau had blasted the tariffs as a historic betrayal of the longstanding friendship between the U.S. and its North American neighbors.
"Problems are not resolved by imposing tariffs, but by talking and dialogue, as we did in recent weeks with your State Department to address the phenomenon of migration," Sheinbaum wrote in Spanish in a social media post Saturday.
"Tariffs against Canada will put your jobs at risk, potentially shutting down American auto assembly plants and other manufacturing facilities," Trudeau said in a news conference Saturday, speaking directly to Americans. "If President Trump wants to usher in a new golden age for the United States, the better path is to partner with Canada, not to punish us."
Canada's retaliatory tariffs, which are also set to go into effect on Tuesday, would have targeted specific goods and industries, as opposed to all imports as Trump's tariffs do. They appear to target industries focused in states that support Trump. Gov. Greg Abbott made clear he would not back down support for Trump in light of Canadian tariffs, posting Saturday on social media: "Careful Trudeau. The Texas economy is larger than Canada’s. And we’re not afraid to use it."
Trump invoked the tariffs under the International Emergency Economic Powers Act, a 1977 law that allows the president to directly impose tariffs in the event of an “unusual and extraordinary threat.” Trump declared during his inauguration speech that border crossings constitute a national emergency.
Mexico and Canada are among the U.S.'s closest trading allies. Trump negotiated a renewed free trade agreement with the two countries in his first term, dubbed the U.S.-Mexico-Canada Agreement, or USMCA. Free trade advocates asserted that by imposing tariffs, he was going against the favorable trade environment his own administration had negotiated.
"USMCA, negotiated by President Trump, is the best trade deal ever," the Texas Association of Business said in a statement. "This landmark agreement has fueled record-breaking trade & job growth in Texas. In 2023 alone, Texas exported over $491B in goods—Mexico & Canada accounted for over half. Tariffs threaten this success. Instead of disrupting trade, we should double down on USMCA’s benefits—modernizing infrastructure, securing supply chains & keeping Texas as North America’s trade powerhouse."
Tariffs would directly impact some of Texas biggest industries, including energy and agriculture. About 60% of crude imports to the U.S. originate in Canada, according to the Energy Information Administration. Texas contains roughly a third of the U.S. refining capacity, transforming crude oil into fuels and other petroleum-based products. Trump did offer a carveout for Canadian energy imports, taxing them at 10% instead of 25%.
The imposition of tariffs on Canadian energy is a drastic shift from Trump's fierce defense of the Keystone XL pipeline, an abandoned infrastructure project that would have connected Canadian crude oil to U.S. refineries.
Representatives of Texas' agriculture sector asserted that tariffs could increase costs on an industry already squeezed by shrinking margins. Tariffs could also prompt overseas consumers to seek alternative markets, such as Brazil. The Trump administration released aid for farmers during his first term to help farmers weather his trade war with China, something Agriculture Secretary-designee Brooke Rollins said she would be receptive to repeating.
"Higher costs of production are very difficult to absorb," the Texas Farm Bureau said in a statement. "Profit margins in many sectors of agriculture are currently extremely thin or non-existent, and higher costs of production cannot be passed on to the consumer. The Trump administration supports U.S. agriculture, and Texas Farm Bureau trusts the administration will protect the interests of farm and ranch families as it makes economic decisions.”
Several of Trump's allies asserted the tariffs were a negotiating tactic to force Mexico and Canada to take border crossings more seriously. He used the threat of 25% tariffs on Colombia to force the Colombian government into accepting deportation flights. In his first term, Trump used the threat of tariffs to pressure Mexico into holding people in that country who were seeking asylum in the U.S. as they waited out their cases.
Disclosure: Texas Association of Business and Texas Farm Bureau have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.
