The recent 30-day suspension of American tariffs on Mexican and Canadian goods underscores the unpredictability of trade policy under US President Donald Trump. His high-stakes approach to economic negotiations ~ leveraging American economic might to extract concessions ~ has once again yielded short-term gains. However, the broader consequences of this approach, both politically and economically, remain uncertain. President Trump can claim a victory by securing commitments from Mexico and Canada on border security and fentanyl trafficking, key issues for his administration.

By positioning himself as a tough negotiator, he reinforces his image as a leader willing to use economic pressure to achieve domestic policy goals. However, his threats of sweeping tariffs have introduced a level of instability that could have lasting repercussions. For Canada, the tariff delay provides temporary relief, especially as its leadership faces political transitions. Border security measures and anti-fentanyl initiatives were already in motion, but the latest agreement adds further commitments. Canadian businesses, however, remain on edge, knowing that Mr Trump’s approach to trade remains fluid. The economic relationship between the two neighbours, traditionally built on stability and mutual benefit, has become increasingly fragile due to these recurring threats. Mexico, under President Claudia Sheinbaum, managed to secure a short-term victory by negotiating a 30-day pause on tariffs, effectively averting a potentially devastating economic blow. This reprieve was a result of a tense negotiation in which Ms Sheinbaum agreed to deploy 10,000 National Guard troops along Mexico’s northern border.

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Their primary mission would be to curb illegal immigration and address the smuggling of fentanyl into the US, critical issues for the Trump administration. In addition to this border security agreement, President Sheinbaum also committed to address the trafficking of high-powered firearms into Mexico to curb cartel violence. While this agreement buys Ms Sheinbaum time and temporarily shields Mexico from trade hostilities, it remains conditional. The real challenge now lies in converting this fragile, temporary truce into a permanent solution. With Mr Trump’s unpredictable approach to trade, the looming threat of renewed tariffs remains. The broader concern is the uncertainty this strategy creates for businesses and investors. A stable trade environment is essential for long-term economic planning. The mere threat of tariffs can cause companies to reconsider supply chains, delay investments, and explore alternative markets.

Moreover, this approach to trade policy risks alienating key allies. While Mr Trump prioritises domestic political gains, his aggressive tactics could push Canada and Mexico to deepen trade ties with other global partners. If US trade relationships become unreliable, businesses may seek more predictable alternatives, weakening North America’s economic integration. In the short term, Mr Trump’s brinkmanship has given him leverage, but it has also sowed doubt about the reliability of US trade policy. If this strategy continues, the long-term consequences ~ economic uncertainty, damaged alliances, and shifting global trade patterns ~ may outweigh the short term wins.