US and Mexico Reach Last-Minute Deal to Avert Trade War

WASHINGTON, D.C. — The United States and Mexico have reached a last-minute agreement to suspend tariffs and avoid a potential trade war, officials from both countries announced Monday. The deal came just hours before U.S. tariffs on Mexican goods were set to take effect on February 4.

Mexican President Claudia Sheinbaum confirmed the agreement, stating that her government will deploy 10,000 National Guard troops to combat drug trafficking, particularly fentanyl, while the U.S. pledged to address illegal firearms smuggling. “We had a good conversation with President [Donald] Trump, with great respect for our nation and sovereignty,” Sheinbaum said during a press conference.

Trump, who spoke with Sheinbaum earlier in the day, described the conversation as “very friendly” and confirmed the suspension of tariffs for one month. “We agreed to immediately suspend the anticipated tariffs for a period of one month, during which we will hold negotiations,” Trump said. The negotiations will be led by U.S. Secretary of State Marco Rubio, Treasury Secretary Scott Bessent, and Commerce Secretary Howard Lutnick, alongside high-level Mexican representatives.

The agreement follows weeks of escalating tensions between the two nations, with Trump threatening tariffs as high as 25% on Mexican imports. The U.S. president has repeatedly cited concerns over drug trafficking and illegal immigration as justification for the tariffs. From January to November 2024, the U.S. imported $466.6 billion worth of goods from Mexico, contributing to a trade deficit of $157.2 billion.

Trump also spoke with Canadian Prime Minister Justin Trudeau on Monday, though the outcome of their discussions remains unclear. The U.S. president criticized Canada for its trade practices, claiming that the country “subsidizes” its economy at the expense of American businesses. “Canada has been a one-way street. We subsidize them with about $200 billion a year,” Trump said.

The announcement of the tariff suspension reversed some of the market turmoil caused by the initial threat. Financial markets had experienced significant volatility, with the U.S. dollar surging against major currencies and stock markets suffering sharp declines. The uncertainty also led to a drop in cryptocurrency values.

Despite the temporary resolution, Trump hinted at future trade conflicts, particularly with the European Union. “It will definitely happen with the European Union, I assure you,” he said, referencing the U.S.’s $300 billion trade deficit with the bloc.

The agreement marks a critical moment in U.S.-Mexico relations, which have faced significant strain in recent years. Both sides emphasized the importance of continued collaboration on security and trade issues. “Our teams will start working today on two fronts: security and commerce,” Sheinbaum said.