U.S. President Donald Trump announced a one-month pause on new tariffs for Mexico after it agreed to deploy 10,000 National Guard troops to its northern border to curb drug trafficking, particularly fentanyl. Mexican President Claudia Sheinbaum confirmed the deal also includes a U.S. commitment to prevent weapons trafficking into Mexico.
The pause allows further negotiations, Trump said. Meanwhile, tariffs on Canada and China will take effect Tuesday. Trump warned the EU could be next, accusing it of unfair trade practices. EU leaders vowed retaliation if targeted.
Financial markets tumbled on fears of a trade war. The S&P 500 dropped 1.7%, while Asian and European stocks also slumped. Canada and Mexico prepared counter-tariffs, and currency markets saw the yuan, peso, and Canadian dollar weaken against the U.S. dollar.
Trump’s proposed tariffs—25% on Canada and Mexico, 10% on China—could slow global growth and drive inflation. Automakers faced sharp declines, with Ford and GM stocks dropping 4-5%. European carmakers, including Volkswagen and BMW, saw losses of 5-6%.
China condemned the fentanyl-related sanctions and vowed to challenge the tariffs at the WTO. Canada also planned legal action. Analysts warned of potential recessions in Canada and Mexico and stagflation in the U.S.
Trump insisted tariffs would remain until the “national emergency” over drugs and immigration ended. Economists estimated EU GDP could shrink by 0.5% if U.S. tariffs hit Europe. Meanwhile, oil prices surged over 1% as gasoline futures jumped nearly 3%.
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