Following a frantic week of diplomacy by Canadian officials, US President Trump has delayed the implementation of the 25% tariff package by one month.
Last night, financial markets were thrown into turmoil as the prospect of trade war with Canada, Mexico, China and the European Union began to be priced into global markets.
Early this morning, President Trump called Mexico President Sheinbaum and Canadian Prime Minister Trudeau to extend an offramp. By all accounts, the demands were largely in line with commitments that both countries had already announced around border security and cracking down on organized crime. Mexico accepted right away, while Canada took the day to sort out details around new commitments related to the creation of a “Fentanyl Czar” and the listing of certain drug cartels as terrorist entities.
While the last-minute deal provides Canada with some breathing room, the diplomatic spat has likely altered the Canada-US relationship forever. Canadian policymakers will continue to prepare for the next tariff showdown with the United States while setting their eyes on the urgent, longer-term project of trade diversification away from our southern neighbor.
The 30-day reprieve pushes the next tariff deadline into the first week of March – the same week the Liberals will elect a new leader, and Canada will see the swearing in of its new Prime Minister.
