Trump pauses Mexico and Canada tariffs for one month

US President Donald Trump has backed away from his tariff threats against Mexico and Canada for 30 days after the two US neighbours agreed to boost border security efforts.

Trump on Saturday had directed that 25 per cent tariffs on most imports from the two American partners - and 10 per cent on Canadian energy products - go into effect at midnight Tuesday (Wednesday AEDT).

In a statement on X, Canadian Prime Minister Justin Trudeau said that on a call with Trump he pledged additional co-operation on border security. It follows similar moves by Mexico earlier.

"Proposed tariffs will be paused for at least 30 days while we work together," Trudeau said.

Earlier Trump paused new tariffs on Mexico for one month after Mexico agreed to reinforce its northern border with 10,000 National Guard members to stem the flow of illegal drugs, particularly fentanyl.

Mexican President Claudia Sheinbaum said the agreement also includes a US commitment to act to prevent trafficking of high-powered weapons to Mexico.

The two leaders spoke by phone on Monday, just hours before US tariffs on Mexico, China and Canada were set to take effect.

Mexico and the US will use the month-long pause to engage in further negotiations, Trump said.

"We have this month to work and convince each other that this is the best way forward," Sheinbaum said at a press conference.

A White House advisor earlier on Monday said the administration had noticed that Mexico was "serious" about Trump's executive order on tariffs.

"The good news is that in our conversations over the weekend, one of the things we've noticed is that Mexicans are very, very serious about doing what President Trump said," White House National Economic Council Director Kevin Hassett said on CNBC.

"President Trump was absolutely 100 per cent clear that this is not a trade war, this is a drug war."

The latest twist in the tariffs saga sent the Canadian dollar soaring after slumping to its lowest in more than two decades. The news also gave US stock index futures a lift after a day of losses on Wall Street.

Speaking in Washington DC on Sunday, Trump indicated that the 27-member European Union would be next in the firing line but did not say when.

"They don't take our cars, they don't take our farm products. They take almost nothing and we take everything from them," he told reporters.

EU leaders meeting at an informal summit in Brussels on Monday said Europe would be prepared to fight back if the US imposes tariffs but also called for reason and negotiation.

EU foreign policy chief Kaja Kallas said if the US and Europe started a trade war "then the one laughing on the side is China".

Economists said the plan to impose 25 per cent tariffs on Canada and Mexico and 10 per cent tariffs on China would slow global growth and drive prices higher for people in the US.

Trump says they are needed to curb immigration and narcotics trafficking and spur domestic industries.

Trump's tariffs would cover almost half of all US imports and would require the United States to more than double its own manufacturing output to cover the gap - an unfeasible task in the near term, ING analysts wrote.

with AP