Trump’s tariff delay on Mexico and Canada relieves global indices

US President Donald Trump on late Monday delayed tariffs on Mexico and Canada by a month after the US neighbours stuck last minute deals to tighten border security against the flow of migrants and the drug fentanyl.

However, US tariffs on China remained unchanged.

Canada agreed to deploy new technology and personnel along its border with the US and launch cooperative efforts to fight organized crime, fentanyl smuggling and money laundering.

“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. Nearly 10,000 frontline personnel are and will be working on protecting the border,” Canada Prime Minister Justin Trudeau posted on social media website ‘X’.

“In addition, Canada is making new commitments to appoint a Fentanyl Czar, we will list cartels as terrorists, ensure 24/7 eyes on the border, 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,” Trudeau further said.

As a measure to stop illegal migration and drugs, Mexico also agreed to reinforce its northern border with 10,000 national guard members. Trump’s decision comes after he had spoken to Mexican President Claudia Sheinbaum.

The Mexican president added that the two countries would continue talks on security and trade and that "the tariffs are put on pause for a month from now.”

“It was a very friendly conversation wherein she agreed to immediately supply 10,000 Mexican Soldiers on the Border separating Mexico and the United States. These soldiers will be specifically designated to stop the flow of fentanyl, and illegal migrants into our Country,” US President Donald Trump said in a post on Truth Social.

“We further agreed to immediately pause the anticipated tariffs for a one-month period during which we will have negotiations headed by Secretary of State Marco Rubio, Secretary of Treasury Scott Bessent, and Secretary of Commerce Howard Lutnick, and high-level Representatives of Mexico. I look forward to participating in those negotiations, with President Sheinbaum, as we attempt to achieve a “deal” between our two Countries,” he further said in the post.

US President Donald Trump on Saturday, February 1 had slapped 25% tariffs on most imports from Canada and Mexico and 10% tariffs on goods from China are to take effect February 4, 2025. In retaliation, Canada and Mexico had also ordered tariffs on American goods. However, China had said it will challenge the tariffs at the World Trade Organization and take countermeasures.

Hong Kong shares hit two-month high after US paused the tariffs, bringing relief to the investors. Hang Seng traded 2.5% higher on Tuesday.

US indices closed lower but recovered from the session’s low. The consumer discretionary stocks, which include carmakers, were hit on fears over the impact of the tariffs. Technology sector also lagged as shares of AI chip giant Nvidia, Apple and electric car maker Tesla all fell more in the range of 2.5% to 5%.

S&P 500 futures were up 0.4% on Tuesday and the dollar had reversed gains on Mexico's peso and the Canadian dollar.

China market remained closed on the account of Lunar new year.

Europe market logged biggest one day drop on Monday following the tariff news. STOXX 600 was down 0.9%.

Oil prices closed at one-month low on Monday on the back of expiration of a higher-priced contract.

Brent futures for April delivery rose 29 cents, or 0.4%, from where that contract closed on Friday to settle at $75.96 a barrel, while US West Texas Intermediate (WTI) crude rose 63 cents, or 0.9%, to settle at $73.16.