U.S. President Donald Trump and Mexican President Claudia Sheinbaum have agreed to put their planned tariffs on hold for a month to allow for further negotiations. Mexico has announced plans to deploy 10,000 members of its national guard to combat drug trafficking.
While tariffs against Canada and China are still set to go into effect, uncertainty looms over the durability of any deals and the potential for a broader trade war. President Trump has indicated the possibility of imposing more import taxes in the future.
The decision to pause the tariffs came after a 'very friendly conversation' between the U.S. and Mexican leaders. Talks will be led by high-level representatives from both countries.
As part of the agreement, Mexico will reinforce its northern border with 10,000 National Guard members to curb drug trafficking, particularly of fentanyl, into the United States. The U.S. has committed to working on preventing the trafficking of high-powered weapons into Mexico.
President Trump has also engaged with Canadian Prime Minister Justin Trudeau regarding tariffs. Both Canada and Mexico had plans to impose their own tariffs in response to U.S. actions.
Financial markets are bracing for the potential impact of new tariffs, with stock markets showing a modest selloff at the opening. There is uncertainty surrounding President Trump's stance on tariffs, given his past statements and actions.
The tariffs are linked to issues of illegal immigration and drug smuggling, with President Trump emphasizing the need for action from Canada and Mexico. Economists have warned that the tariffs could lead to price increases and hinder economic growth.
Despite assurances from the White House that this is not a trade war but a 'drug war,' concerns remain about the broader implications of escalating trade tensions. The impact on the U.S. economy could be significant if a resolution is not reached.
