U.S. President Donald Trump has agreed to pause his planned 25% tariffs on Canadian and Mexican imports for 30 days after reaching last-minute deals with both countries’ leaders.

The decision came after Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum made key commitments to bolster their border security, deploy personnel, and take aggressive action against fentanyl trafficking.

The announcement, which arrived just hours before the tariffs were set to take effect at midnight on Tuesday, has temporarily calmed tensions but has done little to quell growing concerns from economists, business leaders, and politicians who criticize Trump’s trade war strategy as reckless and economically damaging.

Many experts have questioned the logic behind Trump’s escalating tariff threats, warning that such policies could lead to higher prices for American consumers, strained diplomatic relations, and economic uncertainty for U.S. businesses reliant on trade with North America.

Background of The Tariffs Wars

Trump has long accused Canada and Mexico of failing to stop the flow of illegal migrants and fentanyl into the United States. He has frequently blamed both nations for what he calls a border crisis, alleging that they have not done enough to prevent the movement of drugs and undocumented individuals across U.S. borders.

On Saturday, Trump made a dramatic move by announcing steep new tariffs on North American imports, declaring that protecting Americans was his duty as president and that he had made a campaign promise to stop illegal aliens and drugs from pouring across U.S. borders.

Under Trump’s original plan, all goods from Canada and Mexico would face a 25% tariff, Canadian energy products would be taxed an additional 10%, and a 10% tariff would apply to all goods from China.

The announcement sparked immediate backlash from Canadian and Mexican officials, as well as from businesses on both sides of the border. Canada and Mexico are two of the United States’ largest trading partners, and tariffs of this magnitude threatened to disrupt supply chains, increase prices on key goods, and strain economic ties.

In response, both nations scrambled to offer concessions that could convince Trump to reconsider his hardline stance.

Canada Concedes to $1.3 Billion Border Plan and Fentanyl Crackdown

During a last-minute phone call on Monday, Trudeau offered a series of commitments in exchange for Trump’s willingness to halt the tariffs. He later outlined these pledges in a post on X. Trudeau announced that Canada would list cartels as terrorists, ensure 24/7 surveillance on the border, and launch a Canada-U.S. Joint Strike Force to combat organized crime, fentanyl, and money laundering.

Trudeau also unveiled a $1.3 billion border security plan, stating that nearly 10,000 Canadian officials would be assigned to border security operations. He pledged new helicopters and surveillance technology to monitor crossings and prevent drug smuggling.

“I just had a good call with President Trump. Canada is implementing our $1.3 billion border plan — reinforcing the border with new choppers, technology and personnel, enhanced coordination with our American partners, and increased resources to stop the flow of fentanyl,” he said.

Trudeau said he is making new commitments to appoint a Fentanyl Czar, list cartels as terrorists, ensure 24/7 eyes on the border, and launch a Canada- U.S. Joint Strike Force to combat organized crime, fentanyl, and money laundering.

“I have also signed a new intelligence directive on organized crime and fentanyl and we will be backing it with $200 million,” he added.

Mexico’s Concessions: 10,000 Troops on the U.S. Border

Meanwhile, in an effort to avoid an economic showdown, Mexican President Claudia Sheinbaum agreed to deploy 10,000 troops to the U.S.-Mexico border to help control illegal crossings. Trump, in a Truth Social post, praised Sheinbaum’s swift action, saying they had a friendly conversation in which she agreed to immediately supply 10,000 Mexican soldiers to stop the flow of fentanyl and illegal migrants into the United States.

As part of the deal, Trump also confirmed that the U.S. and Mexico would enter a 30-day negotiation period, led by Secretary of State Marco Rubio, Secretary of Treasury Scott Bessent, and Secretary of Commerce Howard Lutnick. The tariffs would remain on hold for now, but Trump warned that they could be reinstated if Mexico and Canada fail to meet their commitments.

Experts Warn Trump’s Tariff War Could Backfire

While Trump is touting his move as a victory, economists and business leaders see it differently. Many argue that Trump’s tactics are reckless and damaging, potentially leading to higher costs for American consumers and businesses. Economist Paul Krugman slammed the move, calling it unnecessary economic self-sabotage that could stifle growth and increase inflation.

Business executives have also criticized Trump’s decision, saying it undermines long-standing trade partnerships. Wall Street reportedly described it as a dumb economic move, adding that the U.S. and Canada have one of the closest trade relationships in the world, yet Trump was treating them like an enemy instead of an ally.

Trump’s tariff threats have already prompted retaliatory measures in Canada. Several provincial leaders have pledged to remove American alcohol from store shelves, a move that could escalate tensions. If the U.S. reinstates the tariffs after 30 days, experts warn that Canada and Mexico could retaliate, imposing their own trade restrictions on U.S. products. Such measures could have severe consequences for key American industries, including agriculture, automobiles, and technology.

All The Aggressions for A Biden’s Deal?

Beyond the economic consequences, many are questioning whether Trump’s aggressive tactics were even necessary. Some analysts argue that the agreements reached mirror deals already negotiated under former President Joe Biden. A commentator on social media asked if Trump had really risked the entire U.S. economy to get the same deal Biden got from Mexico.

Mexico was normalized. Canada was normalized. But China? I am not sure what will happen as China decides to retaliate over the tariff imposed by the US Government: “China has retaliated against the United States after President Donald Trump imposed a fresh 10% tariff on Chinese imports, reigniting a trade war between the world’s two largest economies. In an immediate countermeasure announced on February 4, China’s finance ministry unveiled a package of tariffs targeting a range of US goods, marking a sharp escalation in economic tensions.”

But I have one side note for Trump and that is simple: you can empower some of these countries to activate “option B” when for decades they have never considered any alternative. For example, Canada may not see China as a friend but there is a way it could be pushed into crosshairs that it would expand its options.

Nigeria disconnected its land neighbours in a mindless policy, and rerouted trade routes ever since. That decision scaled poverty across Nigerian cities and most of those countries have moved beyond Nigeria. Before that land border closure, Onitsha was the core market for many Nigerian neighbours as the largest open market in West Africa. But after the land closure, Onitsha is yet to recover!

Many small producers in Ibadan, Aba, etc went bankrupt as they lost customers in Cameroon, Togo, Benin Republic, etc. In short, Nigeria ended up achieving one thing: Nigeria made Port of Lome in Togo, a country of less than 10 million, to become the largest port in West Africa, ahead of any port in Nigeria then (Port of Abidjan has overtaken Lome now)! We’re more than 23X the size of Togo.

So, the US should not be overly overconfident as it opens a new chapter for the EU. The UK used to brag that it was feeding Europe. But after BREXIT, across all core metrics, the UK has diminished economically. What does that tell us? Trump and his team should be nuanced on these things because they could kick the world to China just as America did to Panama some decades ago, even though Trump wants to return to doing business with the country now!

China introduced a bevy of its own measures against the U.S. in response to President Trump’s tariffs on Chinese goods from Tuesday. They include levies on U.S. coal, oil, liquefied natural gas and agricultural products, as well as an antitrust investigation into Google. Trump, who previously called the 10% tariffs on China an “opening salvo,” said he planned to speak to Chinese President Xi Jinping this week. The U.S. reached agreements Monday to delay tariffs on Canada and Mexico.

China Retaliates Against Trump’s Tariffs, Imposes 10% and 15% Tariffs on A Range of U.S. Goods

China has retaliated against the United States after President Donald Trump imposed a fresh 10% tariff on Chinese imports, reigniting a trade war between the world’s two largest economies.

In an immediate countermeasure announced on February 4, China’s finance ministry unveiled a package of tariffs targeting a range of US goods, marking a sharp escalation in economic tensions.

According to Reuters, China will impose a 15% tariff on US coal and liquefied natural gas (LNG) while an additional 10% tariff will apply to crude oil, farm equipment, and certain automobiles. These measures were announced just hours after the US tariffs went into effect at 05:01 GMT, underscoring Beijing’s resolve to respond forcefully.

Beyond the tariff measures, China’s anti-monopoly regulator launched an investigation into Google over alleged anti-trust violations, a move widely seen as retaliatory. The State Administration for Market Regulation confirmed the probe in a Tuesday statement, raising concerns about the deepening economic rift between the two countries and the potential impact on major US tech firms operating in China.

In another notable move, China’s Commerce Ministry and Customs Administration jointly announced new export controls on key industrial minerals, including tungsten, tellurium, ruthenium, molybdenum, and ruthenium-related items. Citing national security concerns, Chinese officials stated that these restrictions were necessary to safeguard the country’s economic interests. These materials are crucial for high-tech manufacturing, including semiconductors and aerospace components, potentially creating further disruptions for American industries reliant on Chinese supply chains.

President Trump’s decision to impose a blanket 10% tariff on all Chinese goods follows his accusation that Beijing has failed to curb the flow of illegal drugs, particularly fentanyl, into the United States. The new round of tariffs, which also affects Canada and Mexico, includes a provision that would escalate duties further if these nations respond with retaliatory measures, heightening fears of a prolonged economic standoff.

Despite the tariffs, Trump has indicated a willingness to engage in dialogue, with plans to hold talks with Chinese President Xi Jinping. However, analysts warn that the escalating tit-for-tat measures could undermine any potential negotiations, worsening economic uncertainty for businesses and investors worldwide.

The US-China trade war, which initially erupted during Trump’s first term, had seen a temporary lull under the Biden administration, but Trump’s latest move indicates a return to protectionist policies.

Economic experts and business leaders have decried Trump’s strategy, with some calling it short-sighted and counterproductive.

“Imposing blanket tariffs will hurt American consumers and businesses just as much as it does China,” said Colin Graham, head of multi-asset strategies at Robeco in London. “It risks increasing inflation and disrupting supply chains that American companies depend on.”

Meanwhile, industry groups representing American exporters expressed concerns over China’s retaliation.

“These tariffs are a blunt instrument that will inflict pain on both sides,” said Clemence Landers, a former US Treasury official now with the Center for Global Development. “China’s targeted tariffs on key US exports such as energy and automobiles will have a significant impact on American businesses and workers.”

The trade dispute has already prompted backlash from leaders in key American industries. US energy companies have warned that additional levies on LNG and crude oil exports could erode the country’s competitive edge in global markets. Additionally, American automakers, who rely on Chinese supply chains for critical components, have voiced concerns over potential production cost increases.

The renewed trade war threatens global markets, igniting concerns of potential global economic meltdown.