US Prez halts tariffs on Mexico for a month, but threatens EU

US President Donald Trump will pause new tariffs on Mexico for one month after Mexico agreed to reinforce its northern border with 10,000 National Guard members to stem the flow of illegal drugs, particularly fentanyl, he said on Monday. However, tariffs on Canada and China remain poised to take effect on Tuesday.

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Mexican President Claudia Sheinbaum said the agreement included a US commitment to act to prevent trafficking of high-powered weapons to Mexico. The two leaders spoke by phone on Monday, hours before US tariffs on Mexico, China and Canada were set to take effect. Trump said the two counties would use the month-long pause to engage in further negotiations.

Meanwhile, US stocks and other global financial markets slumped on the looming tariffs, while world leaders responded to Trump’s threats to expand tariffs to the European Union. The benchmark S&P 500 fell 1.7% at the opening bell. US oil prices jumped more than 1%, while gasoline futures rose nearly 3%.

On Sunday, Trump indicated that the 27-nation European Union would be next in the firing line. “They don’t take our cars, nor our farm products, while we take everything from them,” he told reporters.

Trump said he had spoken with Canadian PM Justin Trudeau and would do so again at 3 pm ET (1 am IST). Both Canada and Mexico had announced retaliatory tariffs of their own.

EU leaders, after an informal summit in Brussels on Monday, said Europe would be prepared to fight back if the US imposes tariffs, but also called for reason and negotiation.

French President Emmanuel Macron said if the EU were attacked in its commercial interests, it would have to “make itself respected and thus react”. Chancellor Olaf Scholz of Germany said the bloc could respond if necessary with its own tariffs against the US, but stressed it was better for the two to find agreement on trade. Trump hinted that Britain, which left EU, might be spared tariffs.