WASHINGTON — US President Donald Trump has agreed to pause his threatened tariffs on Mexico and Canada for 30 days after both countries agreed to take steps to strengthen their border security and clamp down on drug trafficking.

The pauses provide a cool-down period after a tumultuous few days that put North America on the cusp of a trade war that could have crushed economic growth, caused prices to soar and ended two of the United States' most critical partnerships.

"Proposed tariffs will be paused for at least 30 days while we work together," Canadian Prime Minister Justin Trudeau posted Monday afternoon on X, saying that his government would name a fentanyl czar, list Mexican cartels as terrorist groups and launch a "Canada-US Joint Strike Force to combat organised crime, fentanyl and money laundering."

The White House confirmed the pause to the United States, which followed a similar move with Mexico that allows for a period of negotiations about drug smuggling and illegal immigration.

On Saturday, Trump had directed 25% tariffs on imports from Mexico and Canada, with another 10% tariff on Canadian oil, natural gas and electricity. He also ordered an additional 10% tax on imports from China.

The 10% tariff that Trump ordered on China is still set to go into effect, though Trump planned to talk with Chinese President Xi Jinping in the next few days.

Trump’s signing of tariff orders for the three nations set off alarms among investors, lawmakers, businesses and consumers. The taxes on imports, if sustained, could push up prices and sabotage growth, even as Trump has suggested they are necessary to get other nations to stop illegal immigration, prevent fentanyl smuggling and treat the United States, in his mind, with respect.

But Trump and Mexican President Claudia Sheinbaum announced the monthlong pause on increased tariffs against one another after what Trump described on social media as a "very friendly conversation," and he said he looked forward to the upcoming talks.

"I look forward to participating in those negotiations, with President Sheinbaum, as we attempt to achieve a ‘deal’ between our two Countries," the president said on social media.

Trump said the talks would be headed by US Secretary of State Marco Rubio, Secretary of Treasury Scott Bessent, Secretary of Commerce nominee Howard Lutnick and high-level representatives of Mexico.

Sheinbaum said she was reinforcing the border with 10,000 members of her country’s National Guard and that the US government would commit "to work to stop the trafficking of high-powered weapons to Mexico."

In 2019, when Mexico’s government also avoided tariffs from Trump’s administration, the government announced it would send 15,000 soldiers to its northern border.

But the outlook was different for Canada for much of Monday, but an agreement came together later in the day.

A senior Canadian official said Canada was not confident it could avoid the looming tariffs as Mexico did because Canada feels as if the Trump administration is shifting its requests of Canada more than it did for Mexico.

Asked on Monday afternoon what Canada could offer in talks to prevent tariffs, Trump told reporters gathered in the Oval Office: "I don’t know."

The US president also indicated that more import taxes could be coming against China: "If we can’t make a deal with China, then the tariffs will be very, very substantial."

White House press secretary Karoline Leavitt told reporters that Trump would speak with Chinese President Xi Jinping in the next couple of days and that the White House would provide a report on the discussion.

Trump has continued to antagonise Canada in recent weeks. He used a Monday social media post to repeat his complaints that Canada has been uncooperative, despite decades of friendship and partnerships that range from World War II to the response to the 9/11 terrorist attacks.

"Canada doesn’t even allow US Banks to open or do business there," Trump posted. "What’s that all about? Many such things, but it’s also a DRUG WAR, and hundreds of thousands of people have died in the US from drugs pouring through the Borders of Mexico and Canada."

He has also continued to discuss the possibility of Canada becoming the USA's 51st state.

The threat of a trade war between the US and its two biggest trading partners sent Wall Street into chaos on Monday.

But after initially falling sharply, US stocks pared their losses after Mexico said it had negotiated a one-month reprieve on the tariffs.

The S&P 500 ended up falling 0.8% after Asian and European indexes logged worse drops. The Dow Jones Industrial Average lost 122 points, or 0.3%, and the Nasdaq composite sank 1.2%.

Some of the heaviest losses hit Big Tech and other companies that could be hurt most by higher interest rates that could result from the US tariffs.

The fear hanging over Wall Street is that could push up prices for groceries, electronics and all kinds of other bills for US households, adding upward pressure on a US inflation rate that’s largely been slowing since its peak three summers ago.

Stubbornly high or accelerating inflation could keep the Federal Reserve from cutting interest rates, which it began doing in September, to give the US economy a boost. Profits for US companies, meanwhile, could face downward pressure from slowing global trade.

Much of Wall Street had been hoping Trump’s talk of tariffs through the presidential campaign was just that, talk, and an opening point for negotiations with US trading partners instead of a permanent policy. Monday’s swivels on Mexico and Canada leave open the question of whether Trump is using tariffs as merely a tool for negotiations.

There is a risk that the tariffs could still come into effect, leaving the global economy uncertain about whether a crisis has been averted or if a possible catastrophe could still be coming in the weeks ahead.

Even if the orders are focused on illegal drugs, Trump's own remarks have often been more about his perceived sense that foreign countries are ripping off the United States by running trade surpluses.

On Sunday, Trump said that tariffs would be coming soon on countries in the European Union. He has discussed tariffs as both a diplomatic tool on national security issues, a way to raise revenues and a vehicle for renegotiating existing trade pacts.

Multiple economists outside the administration have warned that the tariffs would push up prices and hamper growth, with Trump himself saying there would be some short term pain after having campaigned last year on the promise that he could tame inflation. — Euronews