Washington, United States:
President Donald Trump delayed the start of tariffs on Mexico and Canada for a month Monday after the US neighbors struck last-minute deals to tighten border measures against the flow of migrants and the drug fentanyl.
Global stock markets had slumped as Trump’s threat of sweeping 25 percent levies on exports from Canada and Mexico to the United States sparked fears of a global trade war.
But after calls with Trump just hours before the US tariffs were due to take effect, both Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum struck deals for a postponement.
Trump said that after “very friendly” talks with Sheinbaum he’d “immediately pause” the tariffs on Mexico, and that his counterpart had agreed to send 10,000 troops to the US-Mexico frontier.
Tensions appeared higher between the US and Canada, but afer two separate calls Trump later said he was “very pleased” and was announcing a 30-day halt in the tariffs.
“Canada has agreed to ensure we have a secure Northern Border, and to finally end the deadly scourge of drugs like Fentanyl that have been pouring into our Country,” he said.
Talks on final deals would continue with both countries, he added.
Trudeau said after the “good call” that Canada deploy nearly 10,000 frontline officers to help secure the border, list drug cartels as terrorists, appoint a “Fentanyl Czar” and crack down on money laundering.
It was not clear the real extent of the changes on the Canadian border, given that just this December authorities there said they already had 8,500 personnel deployed.
Stocks slump
China remains in the firing line for Trump tariffs. It faces a further 10 percent duty on top of existing levies.
The US president said last-minute talks between Washington and Beijing will likely be held “probably in the next 24 hours” to avoid new tariffs on Chinese imports.
Canada, China and Mexico are the United States’s three biggest trading partners, and Trump’s threatened tariffs have sent shock waves through the global economy.
Wall Street’s three main indices fell sharply in early deals, but clawed back ground after Trump’s announcement on the Mexico deal.
The London, Paris and Frankfurt stock markets finished in the red as Trump warned over the weekend that the European Union would be next in the firing line and did not rule out tariffs on Britain.
The Mexican peso and Canadian dollar also sank against the greenback, while oil jumped despite Trump limiting the levy on Canada’s energy imports at 10 percent to avoid a spike in fuel prices.
The White House said earlier there had been a “heck of a lot of talks” over the weekend.
“This is not a trade war, this is a drug war,” National Economic Council Director Kevin Hassett told CNBC, complaining that “the Canadians appeared to have misunderstood the plain language.”
However, US government figures show that only a minimal quantity of drugs comes via Canada.
51st state?
Canada had vowed to respond strongly to the tariffs.
Its most populous province Ontario on Monday had banned US firms from bidding on tens of billions of dollars in government contracts — and dumped a deal with Trump ally Elon Musk’s Starlink.
Trump has upped the pressure recently by calling Canada’s existence into question — once again calling on Monday for it to become the 51st US state.
A political crisis in the Canadian government over Trump’s tariff threats led to Trudeau announcing earlier this month that he would quit too. Canadians now face elections as early as April.
The US president — who has said that tariff is the “most beautiful word in the dictionary” — is going even further in his second term on the levies than he did in his first.
He has insisted that the impact would be borne by foreign exporters without being passed on to American consumers, despite most experts saying the contrary.
But the billionaire 78-year-old did acknowledge as he returned from a weekend at his Florida resort Sunday that Americans might feel economic “pain”.
Trump has also wielded tariffs as a threat to achieve his wider policy goals, most recently when he said he would slap them on Colombia when it turned back US military planes carrying deported migrants.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)