The tariff sheriff arrives

Trump rattled global markets when he announced tariffs on Canada, Mexico and China, reigniting fears of an escalating trade war.

- WILSON SY

However, global equities and currencies recovered when Trump paused the tariffs on Canada and Mexico for 30 days.

Pause on tariffs on Canada and Mexico The pause on the tariffs came as Canada and Mexico agreed to improve border security and implement steps to prevent the trafficking of fentanyl to the U.S. Canada said that it would implement its $1.3-billion border plan and the deployment of nearly 10,000 personnel to protect the border. Canada also put on hold its plan to impose a 25 percent tariff on $155 billion worth of U.S. goods. Mexico agreed to immediately send 10,000 National Guard troops to the country's northern border to stem shipments of fentanyl and other drugs to the U.S.

A welcome development The pause on tariffs on Canada and Mexico is a welcome development for financial markets and the global economy. Canada and Mexico are the top two trading partners of the U.S. with over $1.6 trillion in total trade. The proposed tariffs are far-reaching and cut across many sectors. Economists fear that an escalating trade war with the U.S. will push Canada and Mexico into recession. After agreeing to a deal with Canada, Trump said, "I am very pleased with this initial outcome, and the tariffs announced on Saturday will be paused for a 30-day period to see whether or not a final economic deal with Canada can be structured."