Tariffs to be lifted: Canada and Mexico reach agreement with Trump

President Trump has delayed new tariffs on Mexican imports for a month after the country agreed to beef up security on its northern border by sending 10 National Guard troops to combat drug trafficking. Canadian Prime Minister Justin Trudeau also announced a 30-day delay. He also promised to strengthen border security, reports Air Force

Photo: Canada © Illuminaphoto | Dreamstime.com

Trump had previously promised that a 25 percent tariff on goods imported from Mexico and Canada and a 10 percent tariff on goods imported from China would be imposed starting February 4. The decision went into effect for China on February 4 at midnight Washington time (5 a.m. GMT).

Beijing immediately announced retaliatory measures. China's Finance Ministry announced that it would impose a 15 percent tariff on U.S. coal and liquefied natural gas imports, as well as 10 percent duties on oil and other U.S. goods such as cars and farm equipment.

On the subject: Trump did not rule out the use of force to annex Greenland and the Panama Canal to the US

Trump has spoken of plans to discuss taxes with Chinese President Xi Jinping, but has yet to do so. Chinese officials have said retaliatory measures will go into effect on Feb. 10.

The US President listed a number of reasons for introducing the new tariffs, including security of the US border, the fight against drug smuggling into the country and the trade deficit.

In addition, the head of the White House stated that he would “definitely introduce” similar customs duties on goods from the European Union, although, according to him, “an agreement can be reached” with Britain.

"They don't buy our cars, they don't buy our agricultural products. They buy almost nothing, while we buy everything from them," Trump argued.

The stock market, which opened on February 3, responded to his latest statements with a noticeable drop in indices.

However, less than a day before the new tariffs were to be imposed, Mexican President Claudia Sheinbaum announced that she had spoken with Trump by phone and they had agreed to a delay.

Sheinbaum clarified that the agreement she negotiated with Trump also includes a commitment by the United States to take measures to prevent the supply of high-powered weapons to Mexico.

Trump explained that the delay would benefit the discussion of new terms of relations between the two countries, which is planned to be held throughout the next month.

"I look forward to engaging with President Sheinbaum as we work to reach an agreement between our two countries," the American president wrote on his Truth Social social network.

"We have a month to work together and convince each other of the best course of action," Sheinbaum said at a press conference.

Following these statements, American securities rose in price by about half the amount they had fallen the day before, which helped strengthen the fallen Mexican peso.

Do tariffs work?

"Basically, the point of a tariff (or tax on imports from other countries) is to protect domestic producers from cheaper competitors from abroad, thereby encouraging the growth of domestic businesses and the jobs they need," said BBC economics correspondent David Darshini.. - President Trump views tariffs as an important source of government revenue. But in practice, they could be detrimental to the welfare of both consumers and businesses — including the very ones they are meant to protect.

The main burden of any additional markups ultimately falls on buyers, who have to buy more expensive goods, sometimes even of worse quality. At the same time, the introduction of duties is usually accompanied by countermeasures from the states to which they apply, which creates inconvenience for all producers in the country interested in the foreign market.

So ultimately, tariffs could stifle trade growth and hinder job creation — which is why President Trump's trade wars have caused such concern around the world."

What's wrong with Canada?

Canada previously announced similar retaliatory measures against US goods.

Trump and Canadian Prime Minister Justin Trudeau spoke twice by phone on February 3. The US president told reporters that the conversations went “very well.”

Trudeau later said the tariffs would be suspended for 30 days. He said Canada was implementing a $1,3 billion border plan to add new helicopters, technology and personnel to the border and “increase resources to stop the flow of fentanyl.”

“We have about 10 people working and will continue to work to secure the border. In addition, Canada is making new commitments to appoint a fentanyl task force, we will designate cartels as terrorists, we will provide 000/200 surveillance of the border, we will launch a Canada-U.S. Joint Strike Force to combat organized crime, fentanyl, and money laundering,” Trudeau said. “I have signed a new intelligence directive on organized crime and fentanyl, and we will support it with $XNUMX million.”

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Then Trump confirmed the postponement.

"Canada has agreed to secure the northern border," he wrote on his social media account, Truth Social. "I am very pleased with this first result and the tariffs announced on Saturday will be suspended for 30 days to see if a final economic agreement can be reached with Canada."

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