Trump brings the US back from the brink of trade war with Canada and Mexico

Good morning and welcome to White House Watch! 

President Donald Trump is set to host Israeli Prime Minister Benjamin Netanyahu today, with their discussion expected to focus on whether the temporary truce in Gaza will become a permanent ceasefire. Until then, let’s get into:

• Trump’s tariff rollercoaster

• A potential electricity crisis

• Companies cosying up to Musk

After Trump took Mexico and Canada to the brink of trade wars, both nations have managed to defuse his tariff bombs. (At least, for now . . . )

Trump halted sweeping tariffs on the US’s two biggest trading partners after separate bilateral phone calls with Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau.

While the White House tried to frame the deals as concessions by Mexico City and Ottawa, for Trump the pauses represent significant climbdowns — and not the first of his nascent second term.

To placate Trump, both Sheinbaum and Trudeau agreed to put 10,000 personnel at their respective borders to stem the flow of migrants and drugs. With this they secured a 30-day reprieve from levies that would have affected hundreds of billions of dollars a year in trade. 

In the interim, the US president will dispatch his secretaries of Treasury, commerce and state to hold talks with high-level Mexican officials on trade and security. Meanwhile, the month-long delay on Canadian levies will expire during Trudeau’s final days in office, setting up another round of uncertain negotiations. 

Markets whipsawed yesterday as the US stood on the edge of a new age of protectionism that unnerved allies and investors. However, stocks managed to recoup heavy losses after the tariff delays. 

“My head hurts,” said one FX trader at a large European bank. “[It was] almost impossible to trade, [there was] too much [news] to process. Buy. No wait, sell. No, actually buy. [Or] just give up,” the person added.

This was on top of the frenzy that took North America by storm over the weekend when panic and anger engulfed Mexico and Canada, sparking a huge backlash from business and a new wave of economic patriotism in Canada.

Mark your calendars for early March, when we could do this all over again.

What questions do you have about Trump’s trade agenda? Write to us at whitehousewatch@ft.com with your name and location and we may answer them in a future newsletter.

The latest headlines

What we’re hearing

Corporate America is strengthening ties with Elon Musk’s companies and cutting deals with them left and right, as the world’s richest man solidifies his power within the Trump administration.

There has been a rush of moves in recent days from the likes of Visa, United Airlines, Amazon, Apple and Oracle. 

Boeing’s chief executive Kelly Ortberg said he had been working with Musk — a direct competitor in the defence and space industries — to speed up delivery of new Air Force One jets, while JPMorgan’s chief Jamie Dimon told CNBC that he and Musk had “hugged it out” after a years-long feud.

Some of the groups’ deals with Musk’s businesses were already in motion, but “there is likely political benefit to a firm accelerating those relationships”, said Jonathan Bundy, a management professor at Arizona State University.

Pulling out of or delaying agreements with Musk’s businesses could also bring retribution from the billionaire, said a Washington lobbyist who represents several multinationals, citing Musk’s criticism of OpenAI.

Richard Aboulafia, managing director at AeroDynamic Advisory, said Musk might be able to improve industrial processes at Boeing, but was sceptical about his involvement with the Air Force One planes.

“Oligarchy is bad enough,” he said. “But oligarchy with a competitor doing the enforcement is double, triple as bad.”

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