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President Trump confirmed Monday that the US had delayed implementing tariffs on Mexico by one month — less than 24 hours before the levies were set to go into effect.
The development comes as Wall Street economists debate whether Trump’s proposed 25% tariff threats on Mexico and Canada will last or even happen, as many now anticipate a similar agreement to be struck between the US and Canada.
"The Canada/Mexico tariffs are likely about leverage," Claudio Irigoyen, lead global economist at Bank of America, wrote in a note to clients on Monday.
"Our view continues to be that temporary tariffs and threats of tariffs on Canada and to Mexico will last until [a new US, Canada, and Mexico trade agreement] is renegotiated," Irigoyen said, noting that a trade agreement is due for review in 2026.
"News reports suggest that President Trump aims to do the review sooner," he said. "In our view, the tariffs against Canada and Mexico are aimed at increasing the US’s leverage in these negotiations."
Others on Wall Street have echoed similar sentiments.
"While the outlook is unclear, we think the Canada- and Mexico-focused tariffs are likely to be short-lived," wrote Jan Hatzius, economist at Goldman Sachs. "We think it is more likely that the tariffs will be temporary."
Tom Lee, head of equity research at Fundstrat, argued in a note early Monday that markets are likely overreacting to the noise, especially given the possibility of a greater upside to resolving the conflict.
To that point, stocks did bounce off session lows following the Mexico news.
"Trump is imposing tariffs to stop the flow of drugs and illegal aliens, different than the trade war of 2018," Lee said, arguing that lifting these sanctions "arguably is more flexible. Because this requires the other nations to cooperate on these objectives. To me this is a reason we expect the markets to be less panicked about this."
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