Trump's trade war with Canada and Mexico has been delayed, and that's a big deal. The trade war was supposed to start on February 4, but it's been put on hold for now. This delay is a result of negotiations between Trump and the leaders of Canada and Mexico, where they agreed to delay the tariffs for a month.
In the negotiations, Mexico agreed to send 10,000 troops from the National Guard to their border to prevent drug trafficking, and Trump pledged to take measures to curb weapons trafficking to Mexico. Canada, on the other hand, agreed to appoint a "fentanyl czar", list Mexican drug cartels as terrorists, and launch a Canada–U.S. Joint Strike Force to combat organized crime and fentanyl and money laundering.
The tariffs, if they had gone into effect, would have had a significant impact on the economies of all three countries. The US would have imposed 25 percent tariffs on all goods from Mexico and Canada, except for Canadian oil and energy exports, which would have been taxed at 10 percent. In response, Canada would have imposed 25 percent tariffs on $30 billion worth of American exports, and Mexico would have implemented tariff and non-tariff retaliatory measures against the US.
The delay in the trade war is a welcome relief for many businesses and consumers in the US, Canada, and Mexico. It gives them a bit more time to prepare for the potential tariffs and to adjust their supply chains. However, the trade war is still a looming threat, and it's unclear what the long-term effects will be.
The US, Canada, and Mexico have a complex trade relationship, with millions of dollars' worth of goods crossing the border every day. The USMCA, which replaced NAFTA in 2020, aims to reduce trade barriers and facilitate the exchange of goods and services between the three countries. However, the trade war threatens to disrupt this relationship and impose significant costs on businesses and consumers.
In terms of what they got out of the delay, Canada and Mexico can breathe a sigh of relief for now. They don't have to worry about the immediate impact of the tariffs, and they have a bit more time to negotiate with the US. The US, on the other hand, gets to delay the potential backlash from its trading partners and can continue to negotiate the terms of the trade war.
Overall, the delay in the trade war is a positive development, but it's unclear what the future holds. The US, Canada, and Mexico need to work together to find a solution that benefits all three countries and avoids the potential costs of a trade war. ¹ ²