U.S. President Donald Trump has suspended new tariffs on Mexico for a month after Mexico agreed on Monday to reinforce its northern border with 10.000 National Guard members to stem the flow of illegal migration and drugs. The deal also includes a U.S. commitment to prevent the trafficking of high-powered weapons to Mexico, Mexican President Claudia Sheinbaum said on social media X.

The two leaders spoke by phone on Monday, just hours before U.S. tariffs on Mexico, China and Canada were set to take effect. Economists say the steep levies would cause widespread economic damage, including higher prices for American businesses and consumers.

Both countries will use the month-long suspension to engage in further negotiations, Trump said. “I look forward to participating in those negotiations, with President Sheinbaum, as we attempt to achieve a ‘deal’ between our two countries,” he wrote on Truth Social.

Good news, but not enough

Peter Sand, chief analyst at Xeneta, said: “A delay in tariffs on Mexico is good news, but it does nothing to ease concerns about the restart of the US-China trade war, which represents a risk of a completely different order of magnitude.”

Sand added that importers have very few options available to deal with the tariff threat. “Trump has imposed tariffs almost immediately, so if importers have not taken action by now, it is already too late. They can consider moving supply chains from China to countries such as India or Southeast Asia, but this requires time, financial investment and a deep understanding of data and market intelligence,” he argued.

The analyst stressed that US importers are being hit by wave after wave of disruptions and spiralling costs to import goods. “They have already faced massive increases in container shipping costs due to the conflict in the Red Sea and now they face a 10% increase in tariffs on imports from China.”

He said: “It is difficult to see how any company can absorb these costs without increasing prices for the end consumer. Given that more than 40% of all containerized imports to the US come directly from China, there are many companies and many consumers that will be affected.”

The threat of a new trade war

Sand said “the ceasefire between Israel and Hamas raised the prospect of a better year for cargo owners in 2025 if a large-scale return of container ships to the Red Sea drives down freight rates.”

However, he stressed that “Trump’s latest move has dashed those hopes because any benefit an importer gains through lower freight rates will be more than offset by a 10% increase in tariffs.”

“If China retaliates and we enter into another escalating trade war, an already bad situation will become even worse for American importers.”