US gains toehold in trade war with Mexico, Canada
New Delhi, Feb 4: In just three weeks since taking office, US President Donald Trump has secured his first victory on trade tariffs, illegal immigration and drug smuggling as both Mexico and Canada have agreed to heightened vigilance and stricter measures to address his security, migration and trade concerns—at least for one month.
The agreement marks an initial step in what Trump sees as a broader battle to reshape North American trade.
US President Donald Trump has suspended for 30 days the increased tariffs he had threatened to impose on Mexico and Canada, following last-minute negotiations with the two neighbouring nations of North America. The deal is now offering temporary relief with promises by both Canada and Mexico to enhance border security and efforts to curb fentanyl trafficking. It offers a temporary reprieve from a trade war that could have sent economic shockwaves across North America.
According to the BBC, Trump’s high-stakes approach appears to have yielded results, with both Mexico and Canada agreeing to take stricter measures to combat illegal immigration and drug smuggling.
The move also reinforces Trump’s “America First” agenda, leveraging the US economy to extract concessions while shielding American consumers from the immediate impact of higher tariffs.
Trump, who previously deployed tariffs as a negotiating tool during his first term—including levies on steel and aluminium—has now escalated his tariff threats, not just against North American partners but also China, which is still set to face a 10% tariff hike on imports beginning Tuesday at midnight.
How it is going to shape up after 30 days is too early to assess. They will definitely remain wary of long-term trade disruptions and their consequences.
Trudeau: Canada Steps Up Border Measures
Canadian Prime Minister Justin Trudeau, in a statement on X, confirmed a “good call” with Trump, highlighting Canada’s commitment to border security enhancements.
“Canada is implementing our $1.3 billion border plan: reinforcing the border with new choppers, technology, and personnel, enhanced coordination with our American partners, and increased resources to stop the flow of fentanyl. Nearly 10,000 frontline personnel are and will be working on protecting the border,” Trudeau said.
Additionally, Trudeau announced the deployment of round-the-clock border surveillance, the appointment of a “Fentanyl Czar,” and the classification of cartels as terrorist organisations. He also pointed to Ontario’s new intelligence directive on organised crime and fentanyl, backed by $200 million in funding.
Mexico Agrees to Reinforce Northern Border
Mexican President Claudia Sheinbaum confirmed that she had spoken with Trump, who agreed to pause 25% tariffs on Mexican imports for a month. In return, Mexico pledged to deploy 10,000 National Guard troops to its northern border to combat illegal immigration and drug trafficking.
Trump took to Truth Social to tout the agreement, stating, “Just spoke with President Claudia Sheinbaum of Mexico. It was a very friendly conversation wherein she agreed to immediately supply 10,000 Mexican soldiers on the border separating Mexico and the United States. These soldiers will be specifically designated to stop the flow of fentanyl and illegal migrants into our Country.”
Trump further announced that high-level negotiations would be conducted between US and Mexican representatives, led by Secretary of State Marco Rubio, Secretary of Treasury Scott Bessent, and Secretary of Commerce Howard Lutnick.
Markets react positively after fall for a day
Financial markets responded favourably to the tariff reprieve. Bloomberg news agency reported that Asian-Pacific stocks have rebounded, with Chinese stocks listed in Hong Kong jumping nearly 4%.
The S&P 500 also reflects optimism over the pause in trade tensions. However, currency markets remained cautious, as traders speculated on whether US-China negotiations could avert further tariff escalations.
Political and business leaders are going to observe eagerly how the US and China are going for further deals and how, after 30 days, the relationship between Mexico, Canada and the United States functions. The question that will keep on hanging is if the tariff threat again resurfaces, will it cast a shadow over global economic stability?