Trump Pauses Tariffs on Mexico and Canada After Border Agreements Reached

Both nations will each send 10,000 personnel to secure their shared borders with the United States in response to President Trump’s 25 percent tariff orders.

(Left) Mexico's President Claudia Sheinbaum speaks during her daily press conference at the National Palace in Mexico City on Feb. 3, 2025. (Center) U.S President Donald Trump speaks to the press in the Oval Office of the White House on Jan. 31, 2025. (Right) Canada's Prime Minister Justin Trudeau speaks during a news conference on Parliament Hill in Ottawa, Canada, on Feb. 1, 2025. Yuri Cortez, Mandel Ngan, Dave Chan/AFP via Getty Images

Leaders of Mexico and Canada agreed on Feb. 3 to strengthen border security in exchange for a pause on the trade policies after U.S. President Donald Trump threatened to impose 25 percent tariffs on products coming from the two countries.

“Tariffs are very powerful, both economically and in getting everything else you want,” Trump said on Feb. 3 while signing executive orders in the Oval Office.

Trump issued executive orders on Feb. 1, set to take effect Feb. 4, levying tariffs on goods from the two U.S. border nations due to illegal immigration and fentanyl trafficking flowing into the United States. Canada and Mexico said they would take their own retaliatory actions against the U.S. tariffs.

With hours to spare before the tariffs were imposed, Canadian Prime Minister Justin Trudeau announced on the social media platform X that he had agreed to a deal during a “good call with President Trump” to pause the fees for 30 days.

In exchange, Canada has agreed to appoint a “fentanyl czar,” invest $139 million (C$200 million) in intelligence operations targeting fentanyl, designate cartels as terrorist organizations, and establish a partnership with the U.S. Joint Strike Force to fight fentanyl trafficking, organized crime, and money laundering, Trudeau said.

Trudeau also repeated his country’s $900 million (C$1.3 billion) plan to secure the border, and said as part of this plan around 10,000 frontline personnel will be working to protect the border.

Talks with Trudeau in an earlier call between the two leaders also included discussions about regulations that Trump said impede American banks from doing business in the northern nation.

“Canada is very tough,” Trump said. “We’re not treated well by Canada, and we have to be treated well.”

The president noted trade policies that prevent American exports—including many agricultural products and vehicles—from Canadian markets and highlighted a trade imbalance that he said hurts the U.S. economy.

“We can’t let them take advantage of the U.S.,” Trump said. “We don’t need them for anything.”

The president added that he believes the United States is self-sufficient in producing energy, lumber, cars, and agricultural products.

He suggested Canada would be better off as a part of the union, given that the U.S. military protects the country.

“What I would like to see: Canada become our 51st state,” Trump said.

Tariffs Aimed at Stopping Illegal Activities

In his Feb. 1 executive order imposing tariffs on Canada, the U.S. president accused Canada of allowing gang members, drug smugglers, and human traffickers to pour into the country.

U.S. President Donald Trump greets Prime Minister Justin Trudeau at the White House in Washington on June 20, 2019. Nicholas Kamm/AFP via Getty Images

Mexican cartels are operating in Canadian cities to manufacture fentanyl and other drugs, and enough of the deadly opioid to kill nearly 10 million people has flowed from Canada into the United States, the president said in his order.

In a separate order targeting Mexico, Trump declared that the nation’s failure to secure its border had led to it becoming a hotbed for illegal drug trafficking activity.

Fentanyl, methamphetamine, cocaine, and other drugs are manufactured and distributed by the cartels, described in the president’s order as having an “intolerable alliance with the government.”

“This alliance endangers the national security of the United States, and we must eradicate the influence of these dangerous cartels from the bilateral environment,” the order reads. “The government of Mexico has afforded safe havens for the cartels to engage in the manufacturing and transportation of illicit drugs, which collectively have led to the overdose deaths of hundreds of thousands of American victims.”

Mexican President Claudia Sheinbaum announced via X on Feb. 3 that Mexico will send 10,000 National Guard members to its northern border to address fentanyl trafficking, after she and Trump reached agreements on security and trade to delay the implementation of tariffs.

“We had a good conversation with President Trump with great respect for our relationship and sovereignty,” she said.

(Left) Mexico's President Claudia Sheinbaum listens to a question during her daily press conference at the National Palace in Mexico City on Nov. 6, 2024; (Right) President Donald Trump speaks in the East Room of the White House in Washington, DC, on Jan. 29, 2025. Alfredo Estrella, Pedro Ugarte/AFP via Getty Images

The United States, in return, will strengthen efforts to stop the flow of weapons, including high-powered rifles, into Mexico, according to Sheinbaum.

Confirming the deal, Trump said the arrangement is mutually beneficial.

“They’re very strong now on the border,” Trump said. “They want to protect it also. They don’t want people coming through Mexico to come into our country.”

In return, Trump is pausing the 25 percent tariffs on Mexican products, though he cautioned that the two countries have not yet come to terms regarding the levies.

Delegations from both nations will come together over the next 30 days to negotiate an agreement, according to the president.

Potential Impacts

Some skeptical of the tariff plan, including Senate Minority Leader Chuck Schumer (D-N.Y.), have suggested the levies could cause some level of inflation, as the price of goods will increase due to the import fees.

The president has acknowledged there could be “some pain” but said he expects the net effect to be positive because they will incentivize more onshoring of manufacturing jobs that will benefit Americans in the long term.

The president identified what he believes is trade leverage with his tariff policies, citing statistics that show other nations being far more dependent on foreign trade than the United States.

Approximately 24 percent of U.S. gross domestic product is from foreign trade, compared with Mexico’s 73 percent and Canada’s 67 percent, according to a statement from the White House.

The U.S. trade deficit surpassed $1 trillion in 2023—the largest in the world—a fact that Trump is seeking to change moving forward.

Trump also pointed to reactions from Colombia—and China, as a result of levies imposed during his first term—to his tariffs as examples of successful policies.

“Nobody can compete with us because we’re the pot of gold, but if we don’t keep winning and keep doing well, we won’t be the pot of gold, and then tariffs won’t be so good for us,” Trump said. “But when you’re the pot of gold, the tariffs are very good, they’re very powerful, and they’re going to make our country very rich again.”

Looking to China

With negotiations underway to stall other tariffs, an order declaring a 10 percent increase on existing levies for Chinese products remains in effect.

Set for implementation on Feb. 4, the surcharge is meant to encourage the Chinese Communist Party to stop allowing the distribution of fentanyl precursor chemicals to other parties.

“China will be dealt with,” Trump said. “China hopefully is going to stop sending us fentanyl, and if they’re not, the tariffs are going to go substantially higher.”