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WASHINGTON — Presidents Donald Trump and Claudia Sheinbaum of Mexico will delay tariffs on each other’s countries for one month in exchange for added military personnel on the U.S.-Mexico border, the two heads of state announced on social media Monday.
Trump imposed 25% tariffs on Mexico and Canada and 10% tariffs on China over the weekend, prompting retaliatory tariffs from the countries that shook economists and Texas’ business community. Mexico is Texas’ biggest trading partner by a wide margin, followed by Canada and China. Trump asserted the tariffs were to compel Mexico and Canada into tamping down illegal border crossings.
Trump said he would pause the tariffs in exchange for Mexico sending 10,000 soldiers to the border “specifically designated to stop the flow of fentanyl, and illegal migrants into our Country.” Sheinbaum said the U.S. also committed to working toward ending arms trafficking into Mexico, a long-time priority for the Mexican government.
During the pause, Trump’s Secretary of State Marco Rubio and his pick for Secretary of Commerce, Howard Lutnick, will negotiate with their Mexican counterparts to find a lasting trade and security agreement. The U.S. Senate has not yet confirmed Lutnick’s nomination. He faces a vote in the Senate Commerce Committee on Wednesday.
“I look forward to participating in those negotiations, with President Sheinbaum, as we attempt to achieve a “deal” between our two Countries,” Trump posted on social media.
Texas is the biggest exporting state in the country, sending over $129 billion in goods to Mexico in 2023. Even many of Trump’s supporters in Texas, who praised him for his tax cuts and freer regulatory agenda, warned that tariffs would be punishing on the state’s economy. Tariffs typically increase inflation as importers increase prices for consumers to make up for lost profits.
The globalized nature of the supply chain means goods often cross borders multiple times before they reach their final consumers, potentially increasing tariffs even further.
Trump did not say anything Monday about changing his tariffs on Canada or China, but said on social media that he would be speaking with Prime Minister Justin Trudeau of Canada this afternoon.
Trump imposed the tariffs under the International Emergency Economic Powers Act, a 1977 law that allows the president to directly impose tariffs in the event of an “unusual and extraordinary threat.” Trump declared during his inauguration speech that border crossings constitute a national emergency.
Mexico and Canada are among the U.S.’s closest trading allies. Trump negotiated a renewed free trade agreement with the two countries in his first term, dubbed the U.S.-Mexico-Canada Agreement, or USMCA. Free trade advocates asserted that by imposing tariffs, he was going against the favorable trade environment his own administration had negotiated.
“USMCA, negotiated by President Trump, is the best trade deal ever,” the Texas Association of Business said in a statement. “This landmark agreement has fueled record-breaking trade & job growth in Texas. In 2023 alone, Texas exported over $491B in goods—Mexico & Canada accounted for over half. Tariffs threaten this success. Instead of disrupting trade, we should double down on USMCA’s benefits—modernizing infrastructure, securing supply chains & keeping Texas as North America’s trade powerhouse.”
Tariffs would directly impact some of Texas biggest industries, including energy and agriculture. About 60% of crude imports to the U.S. originate in Canada, according to the Energy Information Administration. Texas contains roughly a third of the U.S. refining capacity, transforming crude oil into fuels and other petroleum-based products. Trump did offer a carveout for Canadian energy imports, taxing them at 10% instead of 25%.
The imposition of tariffs on Canadian energy is a drastic shift from Trump’s fierce defense of the Keystone XL pipeline, an abandoned infrastructure project that would have connected Canadian crude oil to U.S. refineries.
Representatives of Texas’ agriculture sector asserted that tariffs could increase costs on an industry already squeezed by shrinking margins. Tariffs could also prompt overseas consumers to seek alternative markets, such as Brazil. The Trump administration released aid for farmers during his first term to help farmers weather his trade war with China, something Agriculture Secretary-designee Brooke Rollins said she would be receptive to repeating.
“Higher costs of production are very difficult to absorb,” the Texas Farm Bureau said in a statement. “Profit margins in many sectors of agriculture are currently extremely thin or non-existent, and higher costs of production cannot be passed on to the consumer. The Trump administration supports U.S. agriculture, and Texas Farm Bureau trusts the administration will protect the interests of farm and ranch families as it makes economic decisions.”
Several of Trump’s allies asserted the tariffs were a negotiating tactic to force Mexico and Canada to take border crossings more seriously. He used the threat of 25% tariffs on Colombia to force the Colombian government into accepting deportation flights. In his first term, Trump used the threat of tariffs to pressure Mexico into holding people in that country who were seeking asylum in the U.S. as they waited out their cases.