Mexico and the United States have reached a one-month agreement to stave off tariffs and a looming trade war, the threat of which sent global markets tumbling early Monday.
The 25% tariffs on Mexico were set to go into effect Tuesday, despite an existing free-trade agreement between the two countries that wasn’t up for renegotiation until 2026. Trump signed the agreement during his first term.
By midday Monday, Trump’s 25% tariff on Canadian goods and a 10% tariff on Chinese goods still appeared on course to begin Tuesday.
Mexico President Claudia Sheinbaum said her country would send 10,000 National Guard troops to its northern border, while President Donald Trump agreed to work to slow the flow of American weapons south of the border. The two leaders reached the agreement in a phone call early Monday.
“It was a very friendly conversation wherein she agreed to immediately supply 10,000 Mexican soldiers on the border separating Mexico and the United States,” Trump said in a social media post on Truth Social, the site he owns. “These soldiers will be specifically designated to stop the flow of fentanyl, and illegal migrants into our country.”
He said his secretaries of State, Treasury and Commerce would work with high-level representatives of Mexico on the issues during the monthlong pause.
The Dow Jones Industrial Average, a key stock index, plunged more than 650 points in early trading before recovering – though still in red territory – after news of the temporary pause in tariffs.
There was anticipation that Sheinbaum was working on a deal after she delayed her regular daily news conference on Monday. She arrived to cheers after posting news of the agreement on X minutes prior.
Following the call with Trump, Sheinbaum said she had agreed to send National Guard troops to the border, while Trump promised to work on one of Mexico’s key issues: reducing weapons trafficking from the U.S. into the hands of criminal organizations.
“He made various proposals and we came to an agreement,” she said. “I told him from the start I wanted the tariffs to be put on hold.”
The last-minute deal had echoes of Trump’s first administration, when he threatened Mexico with tariffs and Sheinbaum’s predecessor Andrés Manuel López Obrador defused the threat, sending thousands of troops under his newly created National Guard to deter migrants from crossing the border.
Trump warned on social media over the weekend that the tariffs could cause Americans “some pain.” Tariffs work like a tax on consumers, as retailers tack the cost of imports on the price of goods.
Trump has repeatedly said trade tariffs would incentivize countries to clamp down on the flow of migrants and fentanyl traveling from their borders into the U.S.
Sheinbaum had slammed Trump’s “slanderous” claim that her government is working in collusion with the cartels and promised a “Plan B” for retaliatory measures that could include tariff and nontariff options, she said earlier.
She highlighted her administration’s work seizing more than 40 tons of drugs, including 20 million doses of fentanyl, over the past four months in a lengthy post on the social media site X. And she blamed the United States for not doing more to curb the trafficking of weapons to Mexican cartels or reduce Americans’ appetite for drugs.
(This story was updated to add new information.)