Trump, Sheinbaum Agree to One-Month Suspension of Tariffs

Mexican President Claudia Sheinbaum and US President Donald Trump have agreed to a one-month suspension of planned tariffs to allow for further negotiations. As part of the agreement, Mexico has committed to deploying 10,000 National Guard troops to strengthen border security and combat drug trafficking.

On Feb. 3, Sheinbaum engaged in discussions with Trump regarding the 25% tariffs set to take effect the following day.  "He asked me, 'For how long?' I said, 'Let us pause it for one month. I am confident that during this time, we will be able to deliver good results for his people and for the people of Mexico.' This was the basis of our agreement," Sheinbaum stated.

Trump described their discussion as very friendly and emphasized the importance of the upcoming negotiations. "We agreed to immediately pause the anticipated tariffs for one month, during which we will hold negotiations led by Secretary of State Marco Rubio, Treasury Secretary Scott Bessent, and Commerce Secretary Howard Lutnick, along with high-level representatives from Mexico. I look forward to participating in these discussions with President Sheinbaum as we work toward a deal between our two countries," Trump stated.

In preparation for the talks, Sheinbaum outlined measures to enhance border security, emphasizing that Mexico would immediately reinforce its northern border to combat drug trafficking, particularly the flow of fentanyl. In response, the United States committed to intensifying efforts to prevent the smuggling of high-powered firearms into Mexico.

Trump also spoke with Canadian Prime Minister Justin Trudeau, reaffirming his dissatisfaction with Canada’s trade policies, particularly restrictions on US financial institutions. He also linked these concerns to broader security issues, including drug trafficking. While Canada and Mexico had considered retaliatory tariffs, both countries ultimately agreed to suspend such measures after Trump postponed tariffs on them for one month.

Trump’s Tariffs, Trade War

Trump’s proposed tariffs included a 25% duty on general imports from Mexico and Canada and an additional 10% tariff on Canadian energy products. China will also face a 10% tariff, with the administration justifying these measures as necessary to curb illegal immigration and fentanyl smuggling, though no specific benchmarks for lifting the tariffs have been outlined. 

Experts note that while China will be affected, it has strategically reduced its reliance on the United States, with US trade accounting for only 3% of China's GDP and less than 15% of its total exports. In contrast, Mexico and Canada remain the United States’ largest trading partners, representing 15.9% and 13.4% of US trade, respectively.

“China has long been preparing less exposure to the US, diversifying in all ways, not just in terms of trading partners, investment, but also currencies and payment system,“ says Keyu Jin, Associate Professor of Economics, London School of Economics, to CNN. “The tariffs will hurt both countries. But you have seen already a gradual kind of redirection of trade to other countries (from Chinese companies).”

While White House National Economic Council Director Kevin Hassett downplayed concerns of a trade war, affected countries have signaled their intent to impose retaliatory measures. Economists warn that these developments could drive up consumer prices, slow economic growth, and increase borrowing costs, with potential consequences for inflation and interest rates. “The risk of escalating into a ‘full-blown trade war’ cannot be ruled out. Before any actual actions are taken, Trump can still use ambiguous strategies to pressure opponents and wait for substantive concessions from them,”  says the Fudan Development Institute.