U.S. stocks pare losses as Trump reaches deal with Mexico

(The Center Square) – A last-minute deal to avert tariffs on imports from Mexico and planned talks between U.S. President Donald Trump and Canadian Prime Minister Justin Trudeau eased worries on Wall Street Monday.

U.S. markets tanked early Monday in reaction to President Donald Trump's announcement of tariffs on Mexico, Canada and China. The major averages pared losses mid-morning after Trump said he would delay tariffs against Mexico by a month.

The quick move added to doubts about whether tough new import duties would come at all. Trump plans to speak with Trudeau Monday afternoon after brokering a deal with Mexico on Monday morning.

Trump and Mexican President Claudia Sheinbaum said the U.S. agreed to pause tariffs on imports from her country after agreeing to a border deal. Sheinbaum said Mexico will immediately reinforce the border with 10,000 members of the National Guard in a move to stop drug trafficking, an issue that has been a problem for decades. Sheinbaum also said the U.S. is "committed to working to prevent the trafficking of high-powered weapons to Mexico."

Trump on Saturday moved to hold Mexico, Canada and China accountable with tariffs on the top three U.S. trading partners. He slapped 25% tariffs on imports from Mexico and Canada and added an additional 10% tariff on China for its role in supplying the chemicals used to make fentanyl, a powerful opioid responsible for most U.S. overdose deaths. Trump said the tariffs were designed to halt the illegal drug trade, including fentanyl smuggling.

On Monday, Trump said he spoke to Sheinbaum and a deal was in the works.

"I just spoke with President Claudia Sheinbaum of Mexico. 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," the president wrote on Truth Social. "These soldiers will be specifically designated to stop the flow of fentanyl, and illegal migrants into our Country. We further agreed to immediately pause the anticipated tariffs for a one month period during which we will have 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. I look forward to participating in those negotiations, with President Sheinbaum, as we attempt to achieve a “deal” between our two Countries."

Mexico, Canada and China are the top three U.S. trading partners responsible for about 40% of U.S. imports in 2024. Some economists warned the move could push prices higher for U.S. consumers. The United States-Mexico-Canada Agreement, or USMCA, governs trade between the U.S. and its northern and southern neighbors. It went into force on July 1, 2020, and Trump signed the deal. That agreement continue to allow for duty-free trading between the three countries, a longtime practice that Trump ended Saturday.