President Trump and Mexican President Claudia Sheinbaum announced on Monday a one-month pause of the planned 25% blanket tariff by the U.S., in exchange for Mexico making concessions on border security while a larger agreement is negotiated. This somewhat pacified the massive Wall Street selloff.
As part of this temporary pause, Sheinbaum committed to deploying 10,000 members of Mexico’s National Guard to strengthen border enforcement, aiming to curb both fentanyl trafficking and illegal immigration into the United States, according to statements from both leaders. Sheinbaum, who spoke with Trump earlier on Monday, said that the U.S. has also committed to increasing efforts to stop the smuggling of firearms into Mexico.
Mexico Commits to Strengthen Border Security
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“I just spoke with President Claudia Sheinbaum of Mexico. It was a very friendly conversation,” Trump said of the call in a Truth Social post. “We will have negotiations headed by Secretary of State Marco Rubio, Secretary of Treasury Scott Bessent, and Secretary of Commerce Howard Lutnick, and high-level Representatives of Mexico.”
On Saturday, Trump imposed a 25 percent tariff on imports from Mexico, accusing the country of not fulfilling his demands to tackle the fentanyl crisis and illegal immigration. The 47th president had initially made this threat last November, shortly after winning the 2024 election.
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This new tariff was meant to be added on top of existing U.S. levies on Mexican goods, prompting Mexico to prepare countermeasures in response.
Mexico is the United States’ biggest trading partner, sending around 80 percent of its exports north. In contrast, only 16 percent of U.S. exports are destined for Mexico. According to U.S. Census Bureau data, trade between the two nations totaled around $775 billion last year.
“We had a good conversation with President Trump with great respect for our relationship and sovereignty; we reached a series of agreements,” Sheinbaum said in a statement on X, per a translation.
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“Our teams will begin working today on two fronts: security and trade,” she added. “They are pausing tariffs for one month from now.”
Trump also imposed a 25 percent tariff on Canadian imports in response to the fentanyl crisis and illegal immigration, while implementing a 10 percent blanket tariff on goods from China.
Canada Fires Back
Outgoing Canadian Prime Minister Justin Trudeau announced a series of retaliatory 25 percent tariffs on over $106 billion worth of U.S. goods. Earlier on Monday, Trump and Trudeau spoke over the phone and agreed to have another call later in the afternoon to continue discussions on a possible resolution.
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Mexico, Canada, and China are the top three trading partners of the United States, collectively accounting for around $1.4 trillion in annual U.S. imports. For comparison, the U.S. gross domestic product (GDP) reached $27.36 trillion in 2023, according to the U.S. Bureau of Economic Analysis.
Had all three tariffs been implemented, estimates from the Tax Foundation suggested GDP could have dropped by 0.4 percentage points, resulting in the loss of around 344,000 jobs and equating to tax increases of roughly $1.2 trillion between 2025 and 2034.
In the short term, the organization projected that the average American household would experience a tax increase of about $830.
“This will be the golden age of America! Will there be some pain? Yes, maybe (and maybe not!). But we will make America great again, and it will all be worth the price that must be paid,” Trump acknowledged on Truth Social Sunday in an all-capitalization post.
