Trump and president Claudia seemingly reach a deal, US-Mexico tariffs paused

President Donald Trump and Mexican President Claudia Sheinbaum have come to a tentative agreement to suspend US tariffs against Mexico for one month. Claudia confirmed the news Monday after a phone call with Trump, with the White House backing her statement.

In exchange for the pause, Mexico will deploy 10,000 National Guard troops to its northern border to curb drug smuggling, specifically targeting fentanyl.

Posting on X, Claudia said, “Mexico will reinforce the northern border with 10,000 members of the National Guard immediately to stop drug trafficking from Mexico to the United States, in particular fentanyl.”

In return, the US agreed to help halt the trafficking of high-powered weapons flowing into Mexico. But if no long-term deal is reached, tariffs will hit Mexico at a crippling 25% rate, choking key exports and hammering industries already stretched by global inflation.

Trump confirmed the deal in a Truth Social post, describing his conversation with Claudia as “very friendly.” He wrote:

“President Sheinbaum agreed to immediately supply 10,000 Mexican soldiers on the border separating Mexico and the United States. These soldiers will be specifically designated to stop the flow of fentanyl and illegal migrants into our country.”

How about Canada and China?

Trump is going after other trade partners too. Canadian goods are about to get slammed with tariffs as high as 25%, with a separate 10% rate targeting energy exports. Trump has accused Canada of blocking US banks and allowing drugs to seep across the border.

“Canada doesn’t even allow US Banks to open or do business there,” he complained in another Truth Social post. “What’s that all about? Hundreds of thousands of people have died in the US from drugs pouring through the borders of Mexico and Canada.”

Canadian Prime Minister Justin Trudeau confirmed he spoke with Trump on Monday morning. The two are scheduled to talk again later in the day. While Canada has threatened retaliatory tariffs, no official measures have been taken yet, though we see posts on X showing that some grocery stores in Toronto are adding a stamp on Canada-made items so folks know what not to buy.

Markets get caught in the uncertainty

Financial markets reacted cautiously to news of the temporary pause. Stock indices opened with a modest selloff, showing investor anxiety over whether Trump’s latest action means more volatility ahead. Businesses are scrambling to prepare for the worst, as Trump’s love of tariffs has shown no signs of fading.

Economists have repeatedly warned that these policies could push prices higher and stunt economic growth.  The US 10-year Treasury yield, which sits at around 4.5%, could surge to 5% if the tariff war escalates. This would drive up borrowing costs for homes, cars, and businesses across the board.

But Trump doesn’t care much for economic orthodoxy. Over the weekend, he said that the US should never have switched from tariffs to income taxes as its main revenue source back in 1913. He’s framing tariffs not as a trade tool but as a form of national security.

His administration insists this isn’t a trade war at all. Kevin Hassett, director of the White House National Economic Council, tried to clarify Trump’s mission. “Read the executive order,” Hassett said on Monday. “President Trump made it 100% clear this isn’t about trade. It’s about stopping drugs.”

Still, many analysts say Trump’s rhetoric often contradicts itself. While the administration is painting this as part of a larger fight against drugs, Trump frequently rails against trade deficits and foreign “rip-offs.” He also said on Sunday that tariffs on European Union countries could be coming soon.

Meanwhile, American consumers are likely to feel the pain soon if no resolution is reached. Higher tariffs mean price hikes on everything from electronics to cars, hitting wallets already stretched by inflation.

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