Loosening and tightening: Trump postpones the US-Mexico trade agreement deadline, says US-Canada talks will not resume "for a while"

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U.S. President Trump has shown a clear divergence in his approach to trade talks with its two neighboring countries. He agreed to postpone the deadline for reaching a trade agreement with Mexico by several weeks, while stating he does not intend to restart talks with Canada "for some time", as trade negotiations between the two countries have stalled due to anti-tariff advertisements from Ontario, Canada.

On Monday the 27th Eastern Time, Mexican President Sheinbaum stated at a press conference that she had a brief conversation with Trump the previous Saturday and both agreed to extend the negotiation period in order to reach an agreement on non-tariff trade barriers that are still under discussion. She said, "There is currently no situation where any special tariffs will be imposed on November 1," that both sides are close to a deal, and have agreed to talk again in the coming weeks. Trump had originally planned to increase fentanyl-related tariffs on certain Mexican goods from 25% to 30% starting November 1.

After Sheinbaum made these remarks, the Mexican peso climbed to its intra-day high; the USD/MXN fell below 18.40 to a new intraday low during the US stock market morning session, almost 0.5% down on the day. Standard Chartered economist Dan Pan stated that comments about the progress of the negotiations "boosted market optimism about Mexico’s relatively advantageous position in trade talks with the U.S., especially considering its high dependence on the U.S. market".

In contrast, on Air Force One en route from Malaysia to Japan on Monday, Trump made it clear he did not want to meet with Canadian Prime Minister Carney during his Asia trip. Both Carney and Trump are scheduled to attend the APEC summit in Korea this week. Trump said:

“I don’t want to see him (Carney). We won’t be talking to them (Canada) for a while. I am very satisfied with the current agreement with Canada, and we will let it continue.”

Mexico Gains Negotiation Buffer Period

On Monday, Sheinbaum said that both she and Trump believed that the US-Mexico talks were going “very smoothly,” even on contentious issues such as security and migration. The White House has not yet commented.

Trump has imposed tariffs on a range of Mexican imports, including steel, aluminum, and automobiles. But he has also shown willingness to negotiate, repeatedly delaying higher tariffs or exempting certain Mexican products—decisions that often came after talks with Sheinbaum. These tariffs apply to products not protected by the USMCA agreement.

Mexican Economic Minister Marcelo Ebrard stressed that despite current tariffs, Mexico still holds a more advantageous position than other countries because it is not subject to universal tariffs, and over 80% of its exports still enjoy zero tariffs and USMCA protection. Over 80% of Mexico’s exports go to the U.S. market.

Earlier this year, Sheinbaum submitted a plan to Congress proposing tariffs up to 50% on products from countries without a trade agreement with Mexico (especially China). Legislators postponed discussions of the proposal until November.

US-Canada Talks Deadlocked

Canada currently faces a 35% U.S. base tariff. However, thanks to exemptions from the USMCA agreement that took effect in 2020, most Canadian exports to the U.S. still actually enjoy zero tariff treatment. The U.S. also imposes industry tariffs independent of the base rate, with Canadian steel and aluminum facing 50% tariffs, and Canadian-manufactured cars and trucks only partly exempt from the U.S. 25% auto tariff.

Due to Ontario’s sponsorship of anti-tariff TV ads, Trump abruptly announced late last Thursday the suspension of all trade talks with Canada.

Wallstreetcn previously mentioned that the ad quoted former U.S. President Reagan criticizing tariffs. Some commentators said the ad angered Trump because it used one of the Republican Party's most iconic voices, Reagan, to criticize tariffs and sow doubts among Republican voters. Some reports say the ad’s use of Reagan to oppose tariffs not only touched on the bottom line of Trump’s tariff policy, but also on his emotional identification with his political “idol” Reagan.

Last Friday, Ontario Premier Doug Ford softened his stance, saying that after continuing to air the ad over the weekend, it would be stopped starting this week. However, Trump expressed dissatisfaction that Ford did not remove the ad immediately.

Last Saturday, Trump said he would raise import tariffs on Canadian goods by 10% because of this ad, but provided no further details.

When asked when the extra tariffs would take effect, Trump said he didn’t know, and said “we’ll wait and see.” He also said that even after learning the ad was funded by Ontario rather than the Canadian federal government, his attitude had not changed. He said, “(Prime Minister Carney) knows—all of them know.”

Carney Says Ready to Restart Talks; No Calls with Trump Since Suspension

On Monday, Carney said he was ready to sit down with Trump anytime to negotiate, and said the U.S. and Canada had made “significant progress” in areas including steel, aluminum, and energy, and had even exchanged lists of terms.

Carney said: “In any complex, high-risk negotiation, unexpected twists can occur, and you have to stay calm in such situations.” He said that he has not spoken with Trump since the talks broke off, but thinks the TV ad was indeed the reason for the suspension, and still sees value in restarting talks.

Carney said his government has not yet received any further details about how the U.S. side would implement the new tariffs.

Carney said, “A series of very detailed, very specific, very comprehensive discussions have been held recently,” and said the Canadian government recognizes the progress made and is ready to restart talks at an appropriate time.

Ford defended the government’s ad campaign, calling it “the best ad ever.” He said he would never apologize for defending provincial jobs, and accused the Trump administration of trying to take those jobs through tariffs.

Ford said he had heard for months about a pending deal, but there was never any mention of relief for Ontario’s hard-hit auto sector. The importance of the auto industry has already declined in Canada-U.S. trade talks.

Ford also said Americans are cheating Canada on the steel trade issue.

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