Trump pauses 25% tariffs on Canada for 30 days as President says call with Trudeau went 'very well'

3 February 2025, 21:59 | Updated: 4 February 2025, 13:11

Donald Trump has confirmed he will pause proposed 25% tariffs on imports from Canada for 30 days in a dramatic u-turn following a phone call with Trudeau.

The president was on course to implement the 25% tariffs on goods imported from Canada and Mexico from Saturday - a move that is forecast to dramatically impact on the US economy.

However, on Monday, Trump announced an initial 30 day pause on the Mexico tariff after speaking with the leader Claudia Sheinbaum.

Hours later, Trump announced a similar deal that would see a 30 day pause on tariffs affecting Canadian exports.

Former Premier Justin Trudeau revealed that in return, Canada would also halt the introduction of tariffs against US goods, revealing both he and Sheinbaum had engaged in constructive phone calls with the US president.

Taking to X, Trudeau said that Canada would now be implementing a $1.3bn border plan, agreeing with trump that measures including choppers and law enforcement would "stop the flow of fentanyl".

The highly addictive drug, which sees drug takers regularly resemble 'zombies', continues to pose issues along Canada's western coast and across the boarder into US cities including San Francisco and Los Angeles.

Describing his call with Trudeau as “very friendly conversation", Trump said the pause would allow for further discussions can take place.

Earlier in the day, Trump revealed: “I just spoke with President Claudia Sheinbaum of Mexico. 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.

“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.”

Canada and Mexico could face being plunged into recession by the US tariffs, according to a Morgan Stanley analysts.

Trump had previously said that his administration is also working on a tariff to impose on China, which would be announced later on Thursday.

The US is the largest importer of goods in the world, with Mexico, China and Canada as its top three suppliers, according to the most recent Census data. The countries also represent huge export markets for the US.

This is why the tariffs are predicted to have dramatic effects on the US economy and set up a trade war between the three countries, who are currently protected by the US-Mexico-Canada free trade agreement.

“We’ll be announcing the tariffs on Canada and Mexico for a number of reasons,” Trump told reporters as he signed executive orders and answered questions about the deadly airplane collision in Washington D.C.

“Number one is the people that have poured into our country so horribly and so much. Number two are the drugs, fentanyl and everything else that have come into the country. Number three are the massive subsidies that we’re giving to Canada and to Mexico in the form of deficits,” he said.

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Trump insists tariffs are paid by the country they are imposed on, but this is not true - tariffs are paid by American companies that import goods and services from those countries.

The companies then usually pass their higher costs on to their consumers, which raises prices for the average American citizen.

However, they might impact Canada and Mexico too, as their products become more expensive to sell in the American market.

But Trump showed no concern that import taxes on the United States' trading partners would have a negative impact on the US economy, despite the risk shown in many economic analyses of higher prices.

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"We don't need the products that they have," he said. "We have all the oil you need. We have all the trees you need, meaning the lumber."

The president also said that China would pay tariffs for its exporting of the chemicals used to make fentanyl.

He has previously stated a 10% tariff that would be on top of other import taxes charged on products from China.

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Trump said Beijing has failed to prevent fentanyl and chemicals associated with the deadly drug from entering the US, which he said they promised him.

“With China, I’m also thinking about something because they’re sending fentanyl into our country, and because of that, they’re causing us hundreds of thousands of deaths,” Trump said Thursday.

“So China is going to end up paying a tariff also for that, and we’re in the process of doing that.”

The US President said he is still considering whether to include oil from those countries as part of his import taxes.

"We may or may not," Trump told reporters in the Oval Office. "We're going to make that determination probably tonight."

Trump said his decision will be based on whether the price of oil charged by the two trading partners is fair.

After he made his comments, the US dollar reached a daily high, while the Canadian dollar and Mexican peso both plunged.

The United States imported almost 4.6 million barrels of oil daily from Canada in October and 563,000 barrels from Mexico, according to the Energy Information Administration.

US daily production during that month averaged nearly 13.5 million barrels a day.