Stocks were tumbling at the start of Monday on news that tariffs President Donald Trump had announced over the weekend would go into effect on Canada, Mexico and China as of midnight Tuesday morning.
But what a difference a few hours can make.
Stocks were quickly clawing back losses by the close of business, as Mexico and Canada ultimately caved, with Mexico agreeing to send 10,000 troops and Canada agreeing to send 10,000 “frontline personnel” to help stem the tide of illegal immigration and drugs like fentanyl.
Mexico was first to offer concessions. Trump posted a social media message just before 9 a.m. Monday morning, saying that he was putting Mexico’s tariffs on hold for 30 days.
“I just spoke with President Claudia Sheinbaum of Mexico,” Trump wrote on Truth Social. “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. These soldiers will be specifically designated to stop the flow of fentanyl, and illegal migrants into our country.”
Trump said he and Sheinbaum have also agreed to further negotiations in the next 30 days to reach a longer-term deal. America’s side of the negotiations will be led by Secretary of State Marco Rubio, Secretary of Treasury Scott Bessent, and Secretary of Commerce Howard Lutnick.
Canada followed suit hours later, agreeing to a border security plan that includes added security personnel, advanced technological tools and the installation of a Canadian administrator who will be tasked to stem the tide of what Trump said is a “flood” of fentanyl and other drugs over the northern border.
“Canada will implement their $1.3 billion border plan, as per Prime Minister (Justin) Trudeau, will be ‘reinforcing the border with new choppers, technology and personnel, enhance coordination with our American partners and increased resources to stop the flow of fentanyl.’” Trump wrote in another Truth Social post, just before 3 p.m. Monday.
Canada committed to appoint a “Fentanyl Czar,” Trump said, as well as creation of a joint U.S.-Canada strike force that will root out organized crime and Fentanyl. The latter intelligence initiative will be backed by $200 million.
“As a president, it is my responsibility to ensure the safety of ALL Americans, and I am doing just that,” Trump continued in his Truth Social post. “I am very pleased with this initial outcome, and the tariffs announced on Saturday will be paused for a 30-day period to see whether or not a final economic deal with Canada can be structured. FAIRNESS FOR ALL!”
Tariffs As Negotiating Tactic
The deals all but had Wyoming Republican leaders saying I told you so Monday afternoon.
“Tariffs are an effective tool to bring our trade partners to the table and negotiate better deals for America — just as President Trump promised,” Rep. Harriet Hageman, R-Wyoming, told Cowboy State Daily in an email. “They will also be effective at bringing manufacturers and manufacturing jobs back to the U.S., which further strengthens our standing in the world.”
Just the threat of tariffs was effective, Hageman added.
“Both Colombia and Mexico (changed) their policies in response,” she said early Monday afternoon, before Canada also backed down. “I believe that we will continue to see their effectiveness grow. Strong trade policies, border security, and sending criminal aliens back to their country of origin are part of the Republican mission to put America First.”
Colombia agreed last week to accept deportees, after Trump threatened punitive tariffs on the country after it rejected two military planes carrying Colombians deported from the United States.
Sen. John Barrasso, R-Wyoming, meanwhile, said Trump’s plans will grow the economy, mitigating any effect of potential future tariffs.
“President Trump has pro-growth policies in terms of cutting government spending, government waste, and the bureaucratic bloat that we have in our federal government right now,” he told Cowboy State Daily in an email. “He is keeping taxes low, getting rid of regulations, and unleashing American energy. All of these things will help grow the economy.”
Barrasso added that he supports Trump’s aim of “holding other countries accountable that do not treat us fairly or properly. “
“We need to make sure China, Mexico, and Canada are stopping fentanyl from entering our country,” he said. “I support what the president is doing.”
Supply Chains Have Already been Restructuring
University of Wyoming Economist Abhay Grover told Cowboy State Daily supply chains have been in restructuring mode for some time, starting with the tariffs on China, imposed during Trump’s first term of office.
“It did help in restructuring the supply chain for sure,” he said. “There are a lot of papers out there that looked at whether businesses diversified their supply chains or not, did supply chain structures inherently change in terms of where the businesses are sourcing from?”
Not only did supply chains change, Grover said, but the changes have been sticky.
“The change has had a very lasting impact in terms of the supply chain network design overall,” he said. “So they could be effective, they could restructure or alter the nature of the supply chain and create long-lasting changes in structure.”
The question ahead for Trump and America though, is whether those changes are sustainable changes over the long haul.
“Are these just stop-gap solutions for the next two or three years?” Grover asked. “Are we creating sustainable alternatives in the long-term, where we might have cost-advantages on other countries?”
That will be key to lasting change, beyond a particular president’s administration, he suggested, and a key part of that equation will be labor costs.
“Let’s look at, say, sneakers,” he said. “These are super labor-intensive products. For labor-intensive products to be manufactured, labor is the asset.”
That gives countries like China, Bangladesh, and Vietnam a huge advantage, because their hourly wages are much lower than America’s.
“They’re pretty competitive,” Grover said. “They’ve developed skills over time. They’ve accumulated this basic knowledge in terms of manufacturing products at a cheaper cost, so even if we import these products with a heavy duty, they might still be very competitive to what we produce in the United States.”
China Still Waiting In The Wings
The 10% additional tariff proposed for China is still set to take effect at midnight on Tuesday morning, though Trump has announced that he and President Xi Jinping will be speaking within the next couple of days.
That will be the first known call between the two leaders since Trump took office on Jan. 20.
Trump has threatened a 10% tariff on top of tariffs already imposed on China, which he described on Monday as an “opening salvo” in remarks to national news media outlets. On the campaign trail, Trump suggested tariffs on China could go as high as 60% more.
China has vowed countermeasures to American tariffs, including filing suit with the World Trade Organization — a largely symbolic move, given that the body has not functioned since 2019 due to a lack of new judges. Various Chinese officials also said that fentanyl is an American problem, not a Chinese problem.
But China has also signaled openness to negotiations. Unlike Canada and Mexico, it did not announce any specific tariffs over the weekend, instead saying only that it would take “corresponding countermeasures to firmly safeguard its rights and interests.”
Trump, meanwhile, has said in public comments that he would “rather not” impose more tariffs on China and hoped to reach a deal instead.
Chinese tariffs would likely hurt Wyoming’s economy less than the Mexican or Canadian tariffs would, Wyoming University Economist Anne Alexander told Cowboy State Daily.
“That one will be less, I would say noticeable, simply because many (Chinese goods) have already been subject to tariffs,” she said. “So, they’ll become more expensive again, but I don’t think it’s going to be quite so much of a shock as tariffs with Canada and Mexico would have been.”
The biggest impact of continued Chinese tariffs would likely be electronics, as well as some pharmaceuticals, according to Alexander and Grover.
“We’re in a fluid environment, as we have been for a couple of weeks now, and particularly with respect to trade,” Alexander said. “I have been thinking ever since he announced these policies a few months ago, I did not really think there would be an execution of these things. Maybe it’s all a negotiation tactic. They simply weren’t taking him as seriously as he wanted them to prior to this.”
Renée Jean can be reached at renee@cowboystatedaily.com.
