Posted on 04 Feb 2025
The US has suspended its new tariffs on Mexico for one month, Mexican President Claudia Sheinbaum has announced.
On Saturday, US president Donald Trump imposed 25% tariffs on all imports from Mexico and Canada, its closest trading partners, starting on 4 February. He cited national security reasons such as illegal immigration and fentanyl flows across the border.
While Canada has enforced retaliatory 25% tariffs on CAD 155 billion ($105 billion) worth of imported goods, Trump and Sheinbaum agreed on Monday to avert the tariffs, on the condition that Mexico adds 10,000 national guard troops at its border with the US to prevent drug flows.
Sheinbaum says the US is committed to preventing the trafficking of high-powered weapons to Mexico, and the two countries will now begin collaborating on security and trade. In a press conference, she cited a shared interest in competing against “China and other global powers”.
Trump said on Truth social that Washington and Mexico City will hold negotiations over the coming weeks, “as we attempt to achieve a ‘deal’ between our two countries”.
The news is likely to be a relief for companies in the automotive sector, as the supply chains of both countries are highly integrated, Kallanish reports. Market observers expected Trump’s tariffs to be short-lived as they would have significant inflationary effects on the North American economy and consumers.
According to BofA Global Research, the duties “are aimed at increasing the US's leverage” in the upcoming negotiations for the US, Canada, and Mexico trade agreement (USMCA), which is due to be reviewed in 2026. During his previous administration, Trump threatened tariffs on Mexico but they were never enforced.
Source:Kallanish
