US President Donald Trump has agreed to pause tariffs on Canada and Mexico for 30 days after both countries took steps on border security and drug trafficking.
However, China has taken steps to counter US tariffs by putting tariffs of its own on US products as well as announcing an antitrust investigation into Google.
US Pauses Tariffs On Canada
Donald Trump’s decision comes after Canada and Mexico took steps to address concerns about border security and drug trafficking. The pause on tariffs comes after days of uncertainty, raising the prospect of a trade war and spooking markets, causing a significant selloff on Monday. A trade war could hamper economic growth, increase prices, and strain key relationships. Trump announced the pause on social media, stating,
“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!”
Canadian Prime Minister Justin Trudeau confirmed the agreement on X, adding that Canada will take several steps, including appointing a fentanyl czar, designating Mexican cartels as terrorist organizations, and launching a task force with the US to combat organized crime and money laundering.
Agreement With Mexico
The US also reached a similar agreement with Mexico, pausing tariffs for negotiations on drug smuggling and illegal immigration to continue. Trump confirmed the pause in a post on X, stating he had a very friendly conversation with Mexican President Claudia Sheinbaum.
“I 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. We further agreed to immediately pause the anticipated tariffs for one month, during which we will have negotiations led by Secretary of State Marco Rubio.”
The decision eases the risk of a trade war. However, market uncertainty remains as Trump could reintroduce tariffs. Trump has also stated he will impose tariffs on imports from the EU. Analysts have warned that tariffs could hinder growth, raise prices, and reduce income. However, Trump has defended his decision, calling it necessary to address illegal immigration, drug smuggling, and what he views as unfair treatment of the US.
China Imposes Counter Tariffs
China has imposed tariffs on multiple US imports and announced an antitrust investigation into Google as it responds to Trump’s tariffs. China and the US engaged in a trade war in 2018 when Trump raised tariffs on Chinese goods, and China responded with measures of its own. However, analysts believe China is in a significantly better position than in 2018. Philip Luck, a former State Department official and director at the Center for Strategic and International Studies, stated,
“They have a much more developed export control regime. We depend on them for a lot of critical minerals: gallium, germanium, graphite, and a host of others. So they could put some significant harm on our economy.”
China said it will implement a 15% tariff on coal and liquefied natural gas and a 10% tariff on crude oil, agricultural machinery, and large-engine cars imported from the US starting Monday. The State Council Tariff Commission said in a statement,
“The U.S.‘s unilateral tariff increase seriously violates the rules of the World Trade Organization. It is not only unhelpful in solving its own problems but also damages normal economic and trade cooperation between China and the U.S.”
China also announced export controls on several elements crucial to the production of high-tech products, including tungsten, tellurium, bismuth, molybdenum, and indium. The supply controls are in addition to the ones placed on key elements like gallium in December. China’s State Administration for Market Regulation initiated an investigation against Google on suspicion of violating antitrust laws.
China has also placed two American companies on an unreliable entities list: PVH Group and Illumina. The listing bars both companies from engaging in China-related import or export activities and making new investments in the country.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
