Trump Delays Tariff Hike on Canada-Mexico, Not China

WASHINGTON, TUESDAY — United States President Donald Trump, on Monday (2/3/2025) local time or early Tuesday WIB, suspended the tariff increase for Mexico and Canada for the next 30 days. This decision was made after Mexico and Canada were said to be willing to enforce immigration rules at their borders with the US.

The suspension of retaliatory tariffs against the US was also announced by Canadian Prime Minister Justin Trudeau. However, this suspension does not apply to China, which will still be subject to an additional 10 percent tariff increase starting this Tuesday.

As reported, on Saturday (1/2/2025) Trump imposed import tariffs on goods from Canada and Mexico up to 25 percent. Canada retaliated against Trump's action by imposing a 25 percent tariff on goods from the US worth 155 billion Canadian dollars or equivalent to 106.5 billion US dollars. Mexico is preparing a similar retaliation.

The decision to postpone the tariff increase was announced by Trump after consecutive talks with Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau on Monday (3/2/2025). Trump described his conversation with Sheinbaum as "very friendly." Meanwhile, with Trudeau, he expressed satisfaction with their productive discussion.

In their discussions, a consensus was reached on how to address the issue of illegal immigrants and the fentanyl drug problem, which Trump cited as the basis for imposing tariffs on the three countries (Canada, Mexico, and China). They agreed on increasing security personnel at the border, which is believed to significantly limit the flow of migrants from Canada and Mexico.

"As President, it is my responsibility to ensure the safety of ALL American citizens, and I am doing that. I am very pleased with these initial results," said Trump on his social media platform, Truth Social.

Trudeau also posted the results of his discussion with Trump on his social media. He stated that the initial agreement that opened the door for cooperation with Trump included, among other things, designating Mexican drug cartels as terrorist groups, including the names of their leaders, and forming a joint Canada-US task force to combat organized crime, fentanyl, and money laundering.

Meanwhile, Mexico is willing to send an additional 10,000 security officers to the border area with the US.

The postponement of the tariff implementation, although only for the next 30 days, is believed to be able to cool down the relations between the three countries that had been tense due to Trump's desire to increase tariffs on commodities from the two countries.

For Mexico, this latest situation is a good thing. However, it is different for Canada.

A senior Canadian official said Canada is not confident it can avoid tariffs like Mexico has, because it feels as though the Trump administration has shifted its demands to Canada more than it has to Mexico.

Kevin Hassett, director of the White House National Economic Council, said it was misleading to characterize the dispute as a trade war despite the retaliatory plans and the risk of escalation. "This is not a trade war, this is a drug war," Hassett said.

He complained that Canadian policymakers and citizens seemed to misunderstand simple language. But U.S. government data shows that only a small amount of fentanyl comes through Canada.

The Canadian government itself has decided to implement the same policy if Trump implements the tariff increase. The response was positive.

The Ontario provincial government on Monday banned U.S. companies from bidding on government contracts worth tens of billions of dollars, and canceled a deal with Starlink, a company owned by Trump ally Elon Musk.

Still, Canadian businesses welcomed the tariff delay. “It’s very encouraging news,” said Chris Davison, head of the Canadian canola producers trade group. “We have a very integrated industry that benefits both countries.”

The trade war delay that investors, business people and political leaders feared sent Wall Street's three main indexes down sharply in early trading, but rebounded after the announcement of the delay.

However, that doesn't mean the drama is over. London, Paris and Frankfurt ended in the red as Trump threatened that the EU would be next and did not rule out tariffs on the UK. There is also no deal with China.

All of this leaves the global economy uncertain whether crisis has been averted or whether a possible disaster could still occur in the coming weeks.

Financial markets, businesses and consumers on Monday were still trying to prepare for the possibility of new tariffs. Stew Leonard Jr., president and CEO of Stew Leonard's, a major U.S. supermarket chain, said his shoppers were considering stocking up on Mexican Casamigos tequila before the tariffs went into effect and switching from Canadian salmon to Norwegian salmon.

Unlike Mexico and Canada, the US government will not delay the tariff increase on Chinese commodities. According to the plan, the tariff increase will take effect on Tuesday (2/4/2025) at exactly 12:01 local time.

Trump warned that he might raise further tariffs on Beijing. "China will hopefully stop sending us fentanyl, and if they don't, the tariffs will go much higher," he said.

In a decision on Saturday (1/2/2025), Trump imposed an additional 10 percent tariff on the tariffs that had previously been applied to China. China has responded by stating that it will complain about Trump's tariff policy to the World Trade Organization (WTO).

China’s Commerce Ministry said Trump’s actions “seriously violated” international trade rules and called on the U.S. to “engage in honest dialogue and strengthen cooperation.”

Regarding the fentanyl issue mentioned by Trump, China views it as a US problem. However, Beijing said it is open to negotiations.

U.S. Customs and Border Protection (CBP) announced Monday that it plans to impose new tariffs on Chinese goods. CBP issued additional guidance to shippers on how they can handle new shipments under Trump's executive order.

White House spokeswoman Karoline Leavitt said Trump expected to have a phone call with Chinese President Xi Jinping in the next 24 hours, in an effort to defuse tensions in a tariff war between the two countries, similar to the one between the United States and Canada and Mexico. (AP/AFP/Reuters)