Handwringing at ten paces
Mexico, Canada, China, the US, Europe, France, and development finance.
The five things you need to know today:
MEXICO. CANADA. Trump’s border security gambit works.
CHINA. UNITED STATES. Trump and Xi want to look tough before doing a deal.
EUROPE. UNITED STATES. Allies focus on each other’s credibility gaps.
FRANCE. After handling the assembly, Bayrou must deal with Macron.
DEVELOPMENT FINANCE. The USAid-State merger risks unintended consequences.
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MEXICO. CANADA. Standoff averted
Trump’s border security gambit works.
US threats to impose 25% tariffs were paused for 30 days after Mexico and Canada agreed to reinforce their borders and stem the smuggling of fentanyl. The White House said Ottawa had "misunderstood" earlier threats as a “trade war”.
INTELLIGENCE. Despite avoiding almost certain recession, Justin Trudeau looks chastened, after an impassioned speech on trade and trust was belied by a last-minute reversal on some relatively straightforward and modest security measures. Whether these ultimately satisfy Donald Trump is up for debate, but cooler heads in Washington will grasp the risks of escalation. Claudia Sheinbaum, by contrast, appears a winner, characterising the pause as her idea.
FOR BUSINESS. Trump's threats were always about politics, not economics. Whoever replaces Trudeau in the Liberal Party may have a better sense of the president's logic but will still struggle to convince Canadians they can handle it. The Conservatives' Pierre Poilievre, by contrast, is using the events to attack longstanding provincial trade barriers, which have so far eluded Trudeau. Dismantling these is good domestic policy, and may also avoid a real trade war.
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CHINA. UNITED STATES. Firm grip
Trump and Xi want to look tough before doing a deal.
Beijing imposed 15% duties on US coal and LNG Tuesday, alongside a 10% levy on oil and several other goods, after US tariffs over fentanyl came into effect. The White House said Donald Trump would speak to Xi Jinping later in the week.
INTELLIGENCE. Unlike Mexico and Canada, China had less incentive, and fewer levers, to engage on Trump’s threats.