This article was originally published by Michael Snyder at The Economic Collapse Blog.
It is so important to know when you are holding a losing hand. Canadian Prime Minister Justin Trudeau initially insisted that he would never back down, but Donald Trump had most of the leverage in this situation. Canada’s economy is very heavily dependent on foreign trade, and the U.S. is Canada’s number one trading partner. If Trudeau ultimately decided to dig in for a fight, Canada’s economy would have collapsed.
Thankfully, he has agreed to negotiate a deal with Trump. To the south, we must give Mexican President Claudia Sheinbaum a lot of credit for realizing that she simply was not going to win this particular battle. So she has agreed to send 10,000 Mexican troops to help secure the border, and Trump has agreed to pause the tariffs on Mexico for a month as negotiations continue…
President Trump announced he is pausing U.S. tariffs targeting imports from Mexico for a month after the country’s president agreed to send 10,000 troops to the U.S.-Mexico border to combat the flow of fentanyl and migrants.
Mr. Trump wrote on Truth Social on Monday that he and Mexican President Claudia Sheinbaum “agreed to immediately pause the anticipated tariffs for a one month period.” The pause, he said, will allow “negotiations headed by Secretary of State Marco Rubio, Secretary of Treasury Scott Bessent, and Secretary of Commerce Howard Lutnick, and high-level Representatives of Mexico.”
Trade accounts for 73 percent of Mexico’s GDP, and the U.S. is Mexico’s number one trading partner.
In fact, approximately 80 percent of Mexico’s exports go to the United States.
Without the United States, Mexico basically doesn’t have an economy, and so Sheinbaum correctly recognized that she was forced to make a deal.
Following his conversation with Sheinbaum, the following is what Trump posted on Truth Social…
In this particular case, Trump’s ultra-aggressive negotiating approach worked.
The Mexicans were forced to fold, and Vice-President JD Vance was very excited about this…
For three days a lot of the far left has actively rooted against America and argued we’d get nothing out of President Trunp’s demands that Mexico secure its country.
Well, how do you like them apples?
Just like Mexico, the Canadian economy is also highly dependent on trade with the United States.
In fact, over three-fourths of Canada’s total exports go to our country…
In 2023, Canada exported close to C$550 billion worth of goods and services to the U.S., or more than three-fourths of its total exports. Energy accounted for 30% and manufacturing contributed around 15% to exports south of the border.
Exports to the U.S. accounts for roughly 17.8% of Canadian gross domestic product and more than 2.4 million jobs in Canada.
At first, Trudeau was pledging that he would match Trump’s tariffs with high tariffs of his own…
Canada will retaliate against President Donald Trump’s new tariffs with 25% levies on a raft of U.S. imports, Prime Minister Justin Trudeau said on Saturday, warning Americans that Trump’s actions would have real consequences for them.
As relations between the long-time allies who share the world’s longest land border reach a new low, Trudeau told a news conference he was slapping tariffs on C$155 billion ($107 billion) of U.S. goods. Those on C$30 billion will take effect on Tuesday, the same day as Trump’s tariffs, and duties on the remaining C$125 billion in 21 days, he said.
But then his advisers probably got him to understand that a trade war with the U.S. could potentially collapse the Canadian economy.
So Trudeau relented, and on Monday, he also made a deal with Trump to send approximately “10,000 frontline personnel” to help secure the border…
I just had a good call with President Trump. Canada is implementing our $1.3 billion border plan — reinforcing the border with new choppers, technology and personnel, enhanced coordination with our American partners, and increased resources to stop the flow of fentanyl. Nearly 10,000 frontline personnel are and will be working on protecting the border.
In addition, Canada is making new commitments to appoint a Fentanyl Czar, we will list cartels as terrorists, ensure 24/7 eyes on the border, launch a Canada- U.S. Joint Strike Force to combat organized crime, fentanyl and money laundering. I have also signed a new intelligence directive on organized crime and fentanyl and we will be backing it with $200 million.
Proposed tariffs will be paused for at least 30 days while we work together.
So for now, a trade war with Mexico and Canada has been averted.
At least for a month.
And that is a really good thing, because the consequences would have been dramatic.
In fact, it was being projected that Canada’s auto industry was “going to shut down within a week”…
“The auto sector is going to shut down within a week,” said Flavio Volpe, president of Canada’s Automotive Parts Manufacturers’ Association, who Bloomberg quoted about the weekend tariff shock announced by the Trump administration: A 25% tariff on imported goods from Mexico and Canada, with energy imports from Canada facing only a 10% tariff, and a 10% tariff on imports from China.
Volpe warned that 25% tariffs, which go into effect at 12:01 am on Tuesday, will mean “absolutely nobody in our business is profitable by a long shot.”
Hopefully permanent deals with both Mexico and Canada will be reached so that we are not facing a similar scenario a month from now.
At this stage, the focus will turn elsewhere.
President Trump is threatening the EU with tariffs, and he doesn’t have as much leverage with EU leaders as he does with the leaders of Mexico and Canada.
As a result, that could turn out to be a protracted battle.
And the Chinese are going to be a tough nut to crack as well.
Trump has already imposed a 10 percent tariff on Chinese goods, and China has absolutely no intention of backing down.
So we shall see what happens.
Throughout human history, trade wars often precede real wars.
And I have been warning that a military conflict with China is coming for many years.
Trump’s ultra-aggressive approach got Mexico and Canada to back down very rapidly, and I am sure that we will see Trump use a similar approach with other nations.
Let us hope that it works, because otherwise we could have a real nightmare on our hands.
Michael’s new book entitled “Why” is available in paperback and for the Kindle on Amazon.com, and you can subscribe to his Substack newsletter at michaeltsnyder.substack.com.
About the Author: Michael Snyder’s new book entitled “Why” is available in paperback and for the Kindle on Amazon.com. He has also written eight other books that are available on Amazon.com including “Chaos”, “End Times”, “7 Year Apocalypse”, “Lost Prophecies Of The Future Of America”, “The Beginning Of The End”, and “Living A Life That Really Matters”. When you purchase any of Michael’s books you help to support the work that he is doing. You can also get his articles by email as soon as he publishes them by subscribing to his Substack newsletter. Michael has published thousands of articles on The Economic Collapse Blog, End Of The American Dream and The Most Important News, and he always freely and happily allows others to republish those articles on their own websites. These are such troubled times, and people need hope. John 3:16 tells us about the hope that God has given us through Jesus Christ: “For God so loved the world, that he gave his only begotten Son, that whosoever believeth in him should not perish, but have everlasting life.” If you have not already done so, we strongly urge you to invite Jesus Christ to be your Lord and Savior today.
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