President Trump announced a delay on part of his global trade war threats, causing U.S. stocks to pare back their losses by midday Monday. Major stock indices had plunged in early trading after Trump announced new tariffs targeting the United States’ largest trading partners over the weekend. Starting Tuesday, imports from Canada and Mexico were set to face 25% duties, and those from China, 10%.
However, following a phone call with Mexican President Claudia Sheinbaum, Trump announced a one-month pause on tariffs on Mexican goods. He stated that his administration will continue negotiations with Mexico to achieve a deal between the two countries. Economists from global bank BNP Paribas warned that the proposed tariffs were larger and came faster than expected.
They noted that the tariffs could slow economic growth and sharply increase U.S. consumer prices in the coming months. Investors in American automakers seemed to welcome the news of the Mexican tariff reprieve. Shares in GM and Ford were each down about 1% by midday, regaining some ground from the morning drop.
Automakers operate complex supply chains between the U.S., Canada, and Mexico, with many manufacturing cars in Mexico or Canada before exporting them to the U.S.
The President’s tariff threats also unsettled markets in Europe. The pan-European STOXX 600 index fell 1% on Monday, and Germany’s DAX dropped 2%.
trade pause lifts market hopes
President Trump indicated that new tariffs on the EU would “definitely happen,” though he suggested a softer approach on the U.K.
As the situation continues to evolve, markets remain sensitive to developments in the U.S. trade policy. The international community’s response to U.S. tariffs shows a clear pivot towards more multilateral trade agreements excluding the U.S.
The threat of import taxes, plus Trump’s remarks that Canada could become the 51st US state, have strained US-Canada relations. Monika Morelli from Montreal cancelled her subscriptions to Netflix and Amazon and called off a trip to New Orleans in response.
“There is something that has been irrevocably broken now, after centuries of the US and Canada being allies,” Ms Morelli said. A national poll found that 91% of Canadians want their country to rely less on the US in the future. The opinion survey also noted a big jump in national pride, with 90% of Canadians following this issue closely.
Shachi Kurl, president of Angus Reid, said the numbers capture “a moment of unity” in the country. They also showed that Canadians have responded to the US tariffs with a shared sense of anger. A “Buy Canadian” sentiment has been pushed by politicians and the general public, with shoppers wanting to support local businesses and avoid purchasing US-made products in protest over the potential tariffs.
Some Canadian provinces are still pushing ahead with “Buy Local” campaigns despite the temporary pause on tariffs. The Canada-US relationship has endured for centuries, with the two countries sharing deep economic ties, familial bonds, and the world’s longest land border. It remains to be seen whether the recent sentiments over Trump’s tariffs signal a fundamental shift between the two countries.
