Trump pauses tariffs on Mexico and Canada but not China

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.

However, US tariffs on China are still due to take effect within hours.

Both Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum said they had agreed to bolster border enforcement efforts in response to Trump's demand to crack down on immigration and drug smuggling. That would pause 25 per cent tariffs due to take effect on Tuesday for 30 days.

Canada agreed to deploy new technology and personnel along its border with the United States and launch co-operative efforts to fight organised crime, fentanyl smuggling and money laundering.

Mexico agreed to reinforce its northern border with 10,000 National Guard members to stem the flow of illegal migration and drugs.

The United States also made a commitment to prevent trafficking of high-powered weapons to Mexico, Sheinbaum said.

"As President, it is my responsibility to ensure the safety of ALL Americans, and I am doing just that. I am very pleased with this initial outcome," Trump said on social media.

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 and would appoint a fentanyl "czar".

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

After speaking by phone with both leaders, Trump said he would try to negotiate economic agreements over the coming month with the two largest US trading partners, whose economies have become tightly intertwined with the United States since a landmark free-trade deal was struck in the 1990s.

No such deal has emerged for China, which faces across-the-board tariffs of 10 per cent that are poised to begin on Wedneday AEDT. A White House spokesperson said Trump would not be speaking with Chinese President Xi Jinping until later in the week.

Trump warned he might increase tariffs on Beijing further.

"China hopefully is going to stop sending us fentanyl, and if they're not, the tariffs are going to go substantially higher," he said.

China has called fentanyl America's problem and said it would challenge the tariffs at the World Trade Organisation and take other countermeasures, but also left the door open for talks.

The latest twist in the 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.

Trump suggested on Sunday the 27-nation European Union would be his next target, but did not say when.

EU leaders 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. The US is the EU's largest trade and investment partner.

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".

Trump hinted that Britain, which left the EU in 2020, might be spared tariffs.

Trump acknowledged over the weekend that his tariffs could cause some short-term pain for US consumers, but says they are needed to curb immigration and narcotics trafficking and spur domestic industries.

The tariffs as originally planned 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.

Other analysts said the tariffs could throw Canada and Mexico into recession and trigger "stagflation" - high inflation, stagnant growth and elevated unemployment - at home.

with AP and EFE