President Trump on Monday delayed his planned tariffs on Canada and Mexico for 30 days after winning concessions from both countries to stem the flow of drugs and migrants into the United States, postponing, at least temporarily, a painful and potentially destabilizing trade war.
Tariffs of 10 percent are still set to go into effect on China on Tuesday morning. Mr. Trump said on Monday that he was likely to talk with President Xi Jinping of China within the next 24 hours about a variety of contentious issues, and warned that the 10 percent tariff he has planned to impose was just an “opening salvo.”
The chaotic last-minute maneuvering demonstrated Mr. Trump’s willingness to use tariffs as leverage against America’s most important trading partners despite the potential for severe economic consequences. Imports from Mexico, China and Canada account for more than a third of the products brought into the United States, more than $1 trillion in goods a year. Economists projected that the tariffs and the anticipated retaliatory measures could fan inflation and disrupt global supply chains.
Stock markets tumbled on Monday morning before Mr. Trump announced that he had reached an agreement with Mexico’s president, Claudia Sheinbaum, to forestall the 25 percent levies. Mr. Trump also said that his initial call with Canada’s prime minister, Justin Trudeau, was “pretty good,” and that the two would speak later in the day.
That second call helped America avert tariffs with one of its closest allies, with Mr. Trump agreeing to a 30-day delay.
“I just had a good call with President Trump,” Mr. Trudeau said in a social media post. He said Canada would push ahead with its $1 billion border reinforcement plan, which had been previously announced, deploy additional technology and staff and appoint a “fentanyl czar.”
Hours after listing a litany of complaints about Canada, Mr. Trump posted on social media that Canada had agreed to many of his demands.
“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, killing hundreds of thousands of Americans, while destroying their families and communities all across our Country,” he said. “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.”
The reversals capped an extraordinary 48 hours during which Mr. Trump threatened to upend the world economy and set off a global trade war over matters that he claimed were about national security before abruptly changing course.
The decisions by Canada and Mexico to accede to Mr. Trump’s demands are likely to embolden a president who has already made clear that he sees tariffs as a source of leverage with adversaries and allies alike.
“Tariffs are very powerful, both economically and in getting everything else you want,” Mr. Trump said on Monday. “When you’re the pot of gold, the tariffs are very good, they’re very powerful and they’re going to make our country very rich again.”
Over the weekend, Mr. Trump signed executive orders approving tariffs on Canada, Mexico and China. The levies of 25 percent on Canada and Mexico were set go into effect just after midnight on Tuesday.
The orders set in motion a scramble by Canadian and Mexican leaders to avert a trade war that had the potential to destabilize the international trading system and throw their economies into recession.
The Trump administration justified the tariffs on the basis of national security, arguing that Canada, Mexico and China were allowing fentanyl to enter the United States and kill Americans. Mr. Trump has also pressured Mexico to take steps to prevent migrants from illegally entering the country.
But on Monday morning, Mr. Trump said that he had made a breakthrough with Ms. Sheinbaum.
Mexico agreed to deploy 10,000 additional troops who would be designated to stop the flow of migrants and illegal drugs across the U.S.-Mexico border. Ms. Sheinbaum said the United States would help to stanch the movement of guns over the border to Mexico.
Top officials from both countries are expected to engage in further talks over the next month.
“There is a relationship of respect and of equals, which is what is important,” Ms. Sheinbaum said.
It remained unclear for most of the day whether Mr. Trump would back down on his threat to hit Canada with levies. While signing executive orders on Monday, Mr. Trump continued to air grievances about Canada, including by claiming that U.S. banks lack access to its market and that high trade barriers restrict American products such as cars.
“A lot of things have been very unfair with Canada,” he said. When asked what Mr. Trudeau could offer to forestall the tariffs, Mr. Trump said “I don’t know.”
“We have big deficits with Canada,” said Mr. Trump, who continued to express his interest in Canada becoming the 51st U.S. state. “I can’t tell you what’s going to happen.”
After their call, however, Mr. Trudeau laid out the additional steps Canada would take to secure its border with the United States.
“Canada is making new commitments to appoint a Fentanyl Czar, we will list cartels as terrorists, ensure 24/7 eyes on the border, launch a Canada- U.S. Joint Strike Force to combat organized crime, fentanyl and money laundering,” Mr. Trudeau wrote on X.
Mr. Trudeau added that he also signed a new intelligence directive on organized crime and fentanyl that would be backed with $200 million. He said that the tariffs would be paused for “at least 30 days” while the two countries continued to discuss the situation.
Mr. Trudeau said over the weekend that Canada would enact steep tariffs on U.S. products if Mr. Trump moved ahead with the tariffs and that Canadian officials were preparing measures to shield their industries from the fallout.
China was also preparing its response. Its ambassador to the United Nations, Fu Cong, said on Monday that China was filing a complaint with the World Trade Organization over Mr. Trump’s tariffs and would consider retaliatory action.
“We are firmly opposed to this unwarranted increase. We do believe this is in violation of W.T.O. rules. That’s why China is filing a complaint at W.T.O., and we may be forced to take countermeasures. There is no winner in a trade war,” he said.
The day began with stocks dropping sharply on Wall Street, tracking a global slump that came overnight as investors dumped shares of companies that would be hardest hit by tariffs on imports from Canada, Mexico and China.
The on-and-off-again rollout of the Trump administration’s trade plans, with the announcement late Monday morning that tariffs on Mexico would be delayed for a month, whipsawed markets, and traders raced to adjust to developments as they unfolded. The peso and Canadian dollar, which had declined against the U.S. dollar because of the looming threat of tariffs, started to recover after Mexico announced that the tariffs would be delayed.
Wall Street analysts took it as a positive sign that the Trump administration was willing to enact a 10 percent tariff for Canadian energy imports, rather than 25 percent, in an acknowledgment that the levies could lead to higher prices for U.S. consumers. The agreement to delay the Mexico tariffs also suggested Mr. Trump’s willingness to back down.
“As we weigh the risk of a deeper trade war and its impact on the economy and markets, we acknowledge the risk that all sides will continue to retaliate,” Brian Gardner, chief U.S. policy analyst for Stifel, an investment services firm, wrote in a note to clients. “Mr. Trump’s actions in his first term, however, suggest that he will ultimately agree to a deal for which he can claim a political victory even if there is no significant change in policy — a cosmetic win.”
As Mr. Trump was negotiating, policymakers continued to weigh the potential effect of his decision on inflation.
Speaking at an event on Monday, Raphael Bostic, president of the Federal Reserve Bank of Atlanta, warned that businesses in his district were planning on passing “100 percent” of the costs of higher tariffs onto their customers. Mr. Bostic said whether or not businesses would be able to do so over an extended period would depend in large part on whether consumers “rebel” and that the answer would vary by product and sector.
In an interview with CNBC on Monday, the president of the Federal Reserve Bank of Boston, Susan Collins, said that “broad-based” tariffs would not only increase prices in so-called final goods, or items ready to sold to consumers, but also “intermediate goods” that are used to make other products.
Still, Ms. Collins said that amid so much uncertainty, there was “no urgency” for the Fed to lower interest rates now. As part of a rotating schedule, she will cast a vote at policy meetings this year.
Lawmakers in Congress were also watching closely for indications about what Mr. Trump would do.
While most Republicans have been reluctant to openly criticize Mr. Trump’s tariffs, it was clear that some are concerned about the effect that they could have on their states.
“I plead with President Trump to exempt potash from the tariff because family farmers get most of our potash from Canada,” Senator Charles E. Grassley, Republican of Iowa, wrote on X.
Reporting was contributed by Colby Smith, Farnaz Fassihi, Matina Stevis-Gridneff, Zolan Kanno-Youngs, Annie Correal and Danielle Kaye.
