30-day pauses implemented for tariffs on Mexico, Canada as negotiations continue

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Tuesday, February 4, 2025 1:52AM
Tariffs on Mexico and Canada paused as negotiations continue
Leaders from Mexico and Canada announced there would be pauses in 25% tariffs put in place by the United States following discussions with President Donald Trump.

RALEIGH, N.C. (WTVD) -- Leaders from Mexico and Canada announced there would be pauses in 25% tariffs put in place by the United States following discussions with President Donald Trump.

Monday morning, Trump announced following "a very friendly conversation" with Mexican President Claudia Sheinbaum, "we further agreed to immediately pause the anticipated tariffs for a one month period" while negotiations of a longer-term deal are ongoing.

Trump said Mexico had agreed to "immediately supply 10,000 Mexican soldiers" on the southern border aimed at addressing illegal immigration and the flow of fentanyl; in a separate statement, heinbaum said the United States agreed to work to prevent high-powered weapons from entering the country.

Hours later, Canadian Prime Minister Justin Trudeau announced proposed tariffs will be paused for at least 30 days, adding the country was "implementing our $1.3 billion border plan" which includes "increased resources to stop the flow of fentanyl." Further, the country pledged to appoint a Fentanyl Czar and launch a Canada-U.S. Joint Strike Force to combat organized crime, fentanyl, and money laundering.

"Hopefully they have an agreement very quickly. I think both sides want an agreement very quickly. Hopefully this doesn't materialize because as you can see the volume of the trade between US and Canada, or North Carolina and Canada, North Carolina and Mexico, it's big. It's a lot," said Mike Hubbard, the Director of International Trade with the EDPNC.

"All companies want certainty. The one thing that businesses can't stand is uncertainty, and we have that right now," added Jonathan Szucs, President of Advanced Superabrasives Incorporated when asked what he hopes the outcomes of the tariffs would bring. He spoke with ABC 11 Monday afternoon, following the announced pause of tariffs on Mexico, and before the announced pause of tariffs between the United States and Canada.

According to the EDPNC, through November, there was nearly $12.3 billion year-to-date in trade between North Carolina and Canada, a figure which surpassed the 2023 figures. Separately, Mexico is the North Carolina's second-largest import market and third-largest export market.

"I think the end game would be a stronger relationship with our allies, a better trading relation, less regulations. I think that's what free trade agreements bring you," said Szucs.

The Mars Hill-based business has clients in Canada, Mexico, and China, with Szucs acknowledging likely impacts should the tariffs remain. He pointed to their work during the pandemic in helping them be prepared to adjust quickly.

"We took a lot of looks at our supply chain during COVID, and how can we shore things up? How can we diversify? Can we find new suppliers if it's single source? Is there a stocking mechanism we have to have or stocking mechanism for them? Is there a third party country distributor that the product can go through if needed? How can we handle this? How can we mitigate our risk," said Szucs.

It's conversations Miles Wright and the staff at Apex Instruments, based in Fuquay-Varina, are also having.

"We've already started looking at what products we buy. We did some pre-buying to try to protect us a little bit. One of the things we just decided today was that the quotations we offer internationally and even domestically, historically, we've made those good for 60 days. We're shortening that period to 30 days just because of the uncertainty of pricing of our supply chain," said Wright.

Wright said practically, certain products they use are only manufactured overseas, complicating efforts to on-shore all work. Further, there are pricing considerations, which are specifically impacted if tariffs ultimately remain in place.

"The reality is pretty simple economics. When the price of a part goes up, we have to charge more or else lose money," said Wright.

"There's volumes of economic research that show that consumers, by and large, follow their wallet," added Scott Dyreng, the Senior Associate Dean of Innovation at The Fuqua School of Business at Duke University.

Wright, who spoke with ABC 11 just hours before Trudeau's announcement, says the businesses both sells to and buys from other companies across the globe, including from Canada, Mexico, and China.

"I'd like to think that maybe these early statements and movements will get tempered back and there'll be some cooler, more reasonable heads that that emerge from a deeper understanding of what this is actually going to mean," said Wright.

Stocks fell Friday afternoon in the immediate aftermath of the announced tariffs, before rebounding, though still largely finishing down, after news of the pause of tariffs on Mexico. Trudeau's announcement of a pause on tariffs between the United States and Canada came after the stock market closed, though stocks are largely up in after-hours trading.

"It will be interesting to see what the market ultimately does here because the market is trying to predict the future. Markets are quite good at predicting the future and we'll see what it determines," said Dyreng, who spoke with ABC 11 in the immediate aftermath of the news about a pause of tariffs on Mexico.

Trump has acknowledged the possibility of higher prices in response to the tariffs, though his administration has emphasized it's just one part of a broader economic plan.

"What I think many people believe is that Trump would like to use tariffs as a way to raise more revenue for the government and also as a way to allow him to reduce taxes on corporations. What I think maybe surprised some people is that the tariffs were arriving before the announcement of, for example, a corporate tax cut. And so if it were the case that the tariffs were imposed, which would potentially increase the costs on corporations for their supplies that they need to produce their goods or services and then without an accompanying tax cut on the corporations, that's a little bit of a double whammy to the corporations," said Dyreng.

A 10% tariff on China remains in effect, as leaders from that country say the move violates the World Trade Organization rules.

Szucs, who noted the company had previously scaled back its work in China in part due to previous tariffs, stressed the importance of flexibility.

"You can find other export partners or other suppliers if need be. You do have to build in maybe a little bit longer lead times. You do have to build in maybe some different costing mechanisms," added Szucs.

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