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USA escalates trade war with Canada and Mexico

The USA's trade tariffs against Canada and Mexico are postponed by at least 30 days. The separate agreements followed after phone calls between Donald Trump and the two countries' leaders, Justin Trudeau and Claudia Sheinbaum.

» Published: February 03 2025

USA escalates trade war with Canada and Mexico
Photo: Justin Tang/AP/TT

The tension in Canada was enormous as they waited for the second phone call of the day between Trump and Trudeau.

Barely an hour after the call, Prime Minister Justin Trudeau announced that the US would pause the introduction of 25 percent tariffs on Canadian goods.

In return, Canada would strengthen border protection against the US, and ensure that border forces are reinforced to a total of 10,000 border police and guards.

"I just had a good conversation with President Trump. Canada is implementing a plan of 1.3 billion Canadian dollars (approximately 10 billion kronor) for border control – with reinforcement of the border with new helicopters, technology, and personnel, as well as improved cooperation with our American partners," Trudeau wrote on X.

Ottawa announced that drug cartels would be terrorist-listed in Canada, and that cooperation with US authorities would be strengthened in the fight against fentanyl smuggling, money laundering, and organized crime.

Mexico too

A few hours earlier, US President Trump had made a similar deal with Mexico's Claudia Sheinbaum.

She too promised to move 10,000 people to the country's border with the US to prevent drug smuggling and money laundering.

The tariffs against Canada and Mexico were to be introduced on Tuesday, similar to the tariffs against China, where tariffs would increase by 10 percent.

Sheinbaum was visibly relieved as she announced the news that the trade war would be postponed for a month. In the agreement with Washington, the two leaders agreed to stop arms smuggling from the US to Mexico.

The conversation with Trump had been very good, and he had "shown great respect for our relationship and our sovereignty," said Sheinbaum.

Positive on the stock exchanges

Donald Trump confirmed the postponement and wrote on Truth Social that he "looks forward to the negotiations", and that the two countries "will try to reach an agreement".

He also stated that the conversation with Sheinbaum had been "friendly".

The stock exchanges in New York reacted immediately positively after the first announcement, and continued to rise when Canada announced that the tariffs would not be introduced on Tuesday.

Over the weekend, Trump announced that goods from Mexico and Canada would be subject to punitive tariffs of 25 percent, except for energy products from Canada, which would receive 10 percent tariffs. This led the leaders of the countries to respond by imposing tariffs on goods from the US.

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TTT
By TTThis article has been altered and translated by Sweden Herald

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