Mexico’s Sheinbaum Strikes Deal with Trump to Pause Tariffs for One Month

Mexican President Claudia Sheinbaum announced on Monday (3) that she has reached an agreement with U.S. President Donald Trump to suspend his recently announced tariffs for one month.

In a post on her social media platform X, Sheinbaum stated that she had a conversation with Trump conducted “with great respect” for the relationship between the two nations. As a result, they reached several agreements:

• Mexico will immediately deploy 10,000 National Guard members to its northern border to curb drug trafficking into the U.S., particularly fentanyl.
• The U.S. has committed to working on preventing the smuggling of high-powered firearms into Mexico.
• Teams from both countries will collaborate on two key areas: security and trade.
• Tariffs between the two nations will be suspended for one month starting immediately.

Speaking to reporters on Monday, Sheinbaum stated that both leaders agreed this was the best way to remain competitive against China and other global markets.

She also announced that Mexico would establish three joint working groups with the U.S. government.

“We already have a working group with the U.S. State Department, where the undersecretary is actively engaged in defending our Mexican brothers and all immigration-related matters,” Sheinbaum said.

“Now, two new groups will be formed—one dedicated to security and another to trade,” she added, emphasizing the importance of the tariff pause. “We now have a month to work and convince everyone that this is the best path forward.”

Trump also addressed the agreement on his social media platform, Truth Social, describing the conversation as “very friendly.” He highlighted that Mexico’s National Guard troops would be “specifically assigned to stop the flow of fentanyl and illegal migrants” into the U.S.

He also confirmed the tariff suspension, adding that Secretary of State Marco Rubio, Treasury Secretary Scott Bessent, and Commerce Secretary Howard Lutnick would lead negotiations with “high-level Mexican representatives.”

“I look forward to personally participating in these negotiations with President Sheinbaum as we work toward a ‘deal’ between our two countries,” Trump wrote.

Immigration and Economy

Asked about the potential economic impact of the agreement and whether Mexico would encourage domestic consumption, Sheinbaum referred to her government’s recently announced economic development plan, Plan Mexico.

“Plan Mexico moves in this direction—it supports trade agreements while also strengthening domestic production, fostering economic growth, and protecting jobs and the environment,” she said.

“This tariff pause is crucial because it allows us to negotiate and reinforce the importance of our trade agreements while continuing to develop our economy,” Sheinbaum added.

She also noted that she holds weekly meetings with Mexico’s Finance and Economy ministers to discuss fiscal policy, revenue, expenditures, and the progress of Plan Mexico.

“The Mexican economy is strong, and this agreement with the U.S. provides us with stability and leverage in our global relationships. […] We always make decisions based on the situation at hand,” she said.

Additionally, Sheinbaum emphasized that the government’s immigration task force maintains regular dialogue with U.S. authorities, always advocating for Mexicans abroad.

“They will always have our support—always. Above all else, it is the president’s duty to defend Mexicans anywhere in the world, particularly in the U.S., which we do with conviction, solidarity, and love,” she said.

Canada Takes a Different Approach

On Saturday, Canadian Prime Minister Justin Trudeau took a different stance, retaliating against Trump’s tariffs by imposing a 25% duty on select U.S. products.

Trudeau criticized the tariffs as harmful to the U.S., a long-standing ally, and urged Canadians to buy local products and vacation in Canada instead of the U.S.

The 25% tariffs target a range of goods, including beer, wine, bourbon, fruit, fruit juices (such as Florida orange juice), clothing, sporting equipment, and household appliances.

Trudeau also stated that his government is considering additional non-tariff measures, including restrictions on critical minerals, energy procurement, and other trade partnerships.

Asked whether Mexico might adopt a similar strategy, Sheinbaum reaffirmed that maintaining a trade agreement with the U.S. remains a priority.

“It’s in our best interest to uphold our trade deal with the U.S. We believe it benefits both Mexico and the United States,” she said, highlighting that Mexico has already launched its own economic recovery plan, Plan Mexico, introduced in January.

Trump’s Tariff Hike

On Friday, White House Press Secretary Karoline Leavitt confirmed that the U.S. would impose 25% tariffs on imports from Canada and Mexico, along with 10% tariffs on Chinese goods, starting Saturday (1).

These tariffs align with Trump’s campaign promise to target the country’s three largest trade partners—nations where the U.S. runs a trade deficit, meaning it imports more than it exports.

According to Trump, the tariffs aim to address trade imbalances and border issues, including undocumented migration and fentanyl trafficking. He also stated that tariffs on the European Union are forthcoming, though he did not specify the rates or timeline.

Until Friday, Trump had yet to implement any actual tariff measures, a delay that had been fueling positive sentiment in emerging markets, including Brazil.

Global Market Reactions

On Monday, financial markets reacted cautiously, with the U.S. dollar strengthening globally amid fears that escalating tariffs could trigger a trade war, push up consumer prices, and complicate central banks’ ability to cut interest rates.

Trump’s tariff policies and anti-immigration stance risk fueling inflation in the U.S. Moreover, his tax cuts for American businesses are seen as a potential strain on public finances.

These factors suggest that the U.S. Federal Reserve may struggle to rein in inflation, likely keeping interest rates higher for longer.

Impact on Brazil

For Brazil, higher U.S. interest rates could have significant consequences. Elevated Treasury yields make U.S. assets more attractive to investors, drawing capital away from emerging markets and strengthening the dollar against other currencies.

This capital outflow could pressure Brazil’s central bank to raise the Selic rate, potentially slowing economic growth. Additionally, if Trump imposes steep tariffs on China, a slowdown in the Chinese economy could hurt Brazilian exports.

Another risk is a potential oversupply of Chinese goods. With the U.S. importing fewer products from China, cheaper Chinese-manufactured goods could flood alternative markets, disrupting global trade dynamics.

Source: G1

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