“They’re going to have to have a tariff. So what they have to do is build their car plants, frankly, and other things in the United States, in which case they have no tariffs,” Trump said at the White House. He said there was “no room left” for a deal that would avert the tariffs by curbing fentanyl flows into the United States.

Why it matters: Canadian agriculture is heavily dependent on exports to the U.S.

Trump’s comments sent U.S. stocks down sharply in late afternoon trading. The dollar rose against the Mexican peso and the Canadian dollar following his remarks.

Trump also said reciprocal tariffs would take effect on April 2 on countries that impose duties on U.S. products.

CEOs and economists say the action, covering more than $900 billion worth of annual U.S. imports from its southern and northern neighbors would deal a serious setback to the highly integrated North American economy.

The tariffs are scheduled to take effect at 12:01 a.m. EST on Tuesday. At that point Canada and Mexico face tariffs of 25 per cent, with 10 per cent for Canadian energy. Mexican officials did not immediately respond to requests for comment.

Canadian Foreign Minister Melanie Joly told reporters that Ottawa was ready to respond. “There’s a level of unpredictability and chaos that comes out of the Oval Office, and we will be dealing with it,” she said.

Speaking on CNN, U.S. Commerce Secretary Howard Lutnick said both countries had made progress on border security but needed to do more to curb fentanyl flows into the U.S. to reduce deaths from the opioid drug.

Trump was also expected on Tuesday to raise fentanyl-related tariffs on Chinese imports to 20 per cent from 10 per cent currently, unless Beijing ends fentanyl trafficking into the U.S. Lutnick did not mention any potential changes to these duties, which would affect about $439 billion worth of annual imports.

Mexico’s response plans

Mexico, after avoiding the first round of Trump’s tariffs by striking a last-minute deal to send thousands of troops to its northern border, has stepped up anti-drug efforts and hinted at new measures on imported Chinese goods.

President Claudia Sheinbaum, in a press conference on Monday before Trump made his remarks, said her government was calm as it awaited Trump’s decision, but that Mexico but would respond if tariffs were imposed.

“We have a plan B, C, D,” Sheinbaum said, without giving any details. She added that coordination with the U.S. on trade and fentanyl trafficking has been “very good.”

According to the Centers for Disease Control and Prevention, 72,776 people died from synthetic opioids in 2023 in the U.S., chiefly from fentanyl.

Navarro: Trump unwavering

White House trade adviser Peter Navarro told CNBC on Monday that the inflationary impact from any tariffs would be “second-order small, so I don’t see the president wavering on any of this, because he knows in order to get to a world in which America is strong and prosperous, with real wages going up and (more) factory jobs. This is the path that he’s chosen.”

Trump on Saturday added another trade action to a cascade of tariff announcements over the past month, opening a national security investigation into imports of lumber and wood products that could result in steep tariffs. Canada, already facing 14.5 per cent U.S. tariffs on softwood lumber, would be hit particularly hard.

During the prior week Trump ordered the revival of a tariff probe on countries that levy digital services taxes, proposed fees of up to $1.5 million every time a Chinese-built ship enters a U.S. port, and launched a new tariff investigation into copper imports.

These come in addition to his plans to determine higher U.S. “reciprocal tariffs” to match the tariff rates of other countries and offset their other trade barriers, a move that could hit the European Union hard over the value added taxes charged by EU countries.

But Trump’s “tariffs on steroids” agenda may keep inflation higher and could tip the global economy into recession, warned Desmond Lachman, a senior fellow at the conservative American Enterprise Institute.

Package orders

The White House late on Sunday issued technical orders from Trump related to tariffs on Mexico and Canada, declaring that low-value packages from the two countries cannot enter the U.S. duty-free under the “de minimis” exemption for shipments under $800. The ban will take effect once the Commerce Department determines that adequate screening measures take place, the order said.

Trump on February 4 suspended the de minimis exclusion for low-value Chinese packages, but the U.S. Customs and Border Protection Agency had to pause the suspension because packages were piling up at U.S. airports without a way to screen them.

Fentanyl traffickers have exploited the de minimis package exemption to ship fentanyl and its precursor chemicals into the U.S., and officials say the packages often enter unscreened.

—Additional reporting by Steve Holland and Susan Heavey in Washington, Kylie Madry and Ana Isabel Martinez in Mexico City, Anna Driver in New York.

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Trump signed proclamations late on Monday raising the U.S. tariff rate on aluminum to 25 per cent from his previous 10 per cent rate and eliminating country exceptions and quota deals as well as hundreds of thousands of product-specific tariff exclusions for both metals.

The measures, which will take effect on March 12, will apply to millions of tons of steel and aluminum imports from Canada, Brazil, Mexico, South Korea and other countries that had been entering the U.S. duty free under the carve-outs.

Mexican Economy Minister Marcelo Ebrard said on Tuesday that the tariff decision was “not justified” and “unfair”.

Canada’s Prime Minister Justin Trudeau called the tariffs “unacceptable”.

European Commission President Ursula von der Leyen joined the condemnation, saying the 27-nation bloc would take “firm and proportionate countermeasures”. Von der Leyen was meeting U.S. Vice President JD Vance at an AI summit in Paris on Tuesday.

The move will simplify tariffs on the metals “so that everyone can understand exactly what it means,” Trump told reporters. “It’s 25 per cent without exceptions or exemptions. That’s all countries, no matter where it comes from, all countries.”

Trump said he would follow with announcements about reciprocal tariffs on all countries that impose duties on U.S. goods over the next two days, and said he was also looking at tariffs on cars, semiconductors and pharmaceuticals.

Asked about threats of retaliation by other countries against his new tariffs, Trump said: “I don’t mind.”

Ready to retaliate

In figures likely to further irk Trump, Germany’s trade surplus with the U.S. reached a record level last year of 70 billion euros (US$72.3 billion), according to data from the German statistics office.

European Commission head Von der Leyen said she deeply regretted the U.S. decision, adding that tariffs were taxes that were bad for business and worse for consumers. EU steel exports to the U.S. have averaged about 3 billion euros (US$3.1 billion) a year over the past decade.

“Unjustified tariffs on the EU will not go unanswered – they will trigger firm and proportionate countermeasures. The EU will act to safeguard its interests,” she said in a statement.

One option for the EU would be to reactivate the tariffs it imposed in 2018 that were suspended under a truce agreed between Von der Leyen and then-U.S. president Joe Biden.

The EU tariffs on U.S. products such as bourbon, motorcycles and orange juice are currently suspended until the end of March.

The American Chamber of Commerce to the EU (AmCham EU), representing U.S. companies active in Europe, also criticized the move as harmful to jobs, prosperity and security on both sides of the Atlantic.

“The damage will extend beyond just the steel and aluminum sectors, impacting all businesses that rely on these materials throughout the supply chain,” it added in a statement.

Trump’s latest trade salvo pushed gold prices to a record high on Tuesday on safe-haven demand in Asian trading before retreating.

Canada to defend itself

Steel imports accounted for about 23 per cent of American steel consumption in 2023, according to American Iron and Steel Institute data, with Canada, Brazil and Mexico the largest suppliers.

Canada, whose abundant hydropower resources aid its metal production, accounted for nearly 80 per cent of U.S. primary aluminum imports in 2024.

Speaking on the sidelines of the Paris artificial intelligence summit, Prime Minister Trudeau said Canada would seek to highlight the negative impact of the U.S. tariffs and, if necessary, its response would be firm and clear.

“Canadians will stand up strongly and firmly if we need to,” he said.

Trump also will impose a new North American standard requiring steel imports to be “melted and poured” and aluminum to be “smelted and cast” within the region to curb U.S. imports of minimally processed Chinese and Russian metals that circumvent other tariffs.

While China exports only tiny volumes of steel to the U.S., it is responsible for much of the world’s excess steel capacity, according to the U.S. It says subsidized production in China forces other countries to export more and leads to transshipment of Chinese steel through other countries into the U.S. to avoid tariffs and other trade restrictions.

—Reporting by Steve Holland, Andrea Shalal, Jeff Mason and David Lawder. Additional reporting by Lidia Kelly in Melbourne, David Ljunggren and Costas Pitas.

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After weeks of intense global speculation over which duties Trump would impose immediately after being sworn in as U.S. president, news that Trump would take more time on tariffs drove a relief rally in global stocks and a dive in the dollar against major currencies.

Trump mentioned no specific tariff plans in his inaugural address, but repeated his intention to create the External Revenue Service, a new agency to collect “massive amounts” of tariffs, duties and other revenues from foreign sources.

“I will immediately begin the overhaul of our trade system to protect American workers and families,” Trump said. “Instead of taxing our citizens to enrich other countries, we will tariff and tax foreign countries to enrich our citizens.”

Trump added that his policies would make America “a manufacturing nation once again.”

During his election campaign, Trump vowed to impose steep tariffs of 10 per cent to 20 per cent on global imports into the U.S. and 60 per cent on goods from China to help reduce a trade deficit that now tops $1 trillion USD annually.

He said after his November election that he would sign “all necessary documents” upon taking office to impose an immediate 25 per cent import surcharge on imports from Canada and Mexico if they failed to clamp down on the flow of illicit drugs and migrants entering the U.S. illegally.

Such duties would tear up longstanding trade agreements, upend supply chains and raise costs, according to trade experts.

The official, confirming a Wall Street Journal report that cited a summary of Trump’s memo, said the new president will instead direct agencies to investigate and remedy persistent trade deficits and address unfair trade and currency policies by other nations.

The memo will single out China, Canada and Mexico for scrutiny but will not announce new tariffs, the official said. It will direct agencies to assess Beijing’s compliance with its 2020 trade deal with the U.S., as well as the status of the U.S.-Mexico-Canada Agreement, the official said.

A more methodical approach

Some industry groups and trade lawyers in Washington had speculated that Trump would invoke the International Emergency Economic Powers Act, a law with sweeping powers to control imports in times of national emergency, to impose immediate tariffs.

But the forthcoming trade memo signals a more methodical approach that would likely involve trade investigations under other legal authorities such as the Section 232 national security trade law and the Section 301 unfair trade practices statute. Trump invoked these laws during his first term, and probes on steel and aluminum and Chinese imports took months to complete.

“It sounds like maybe he’s been listening to the people telling him that immediate tariffs would really hurt the financial markets,” said William Reinsch, a trade expert at the Center for Strategic and International Studies.

But Reinsch and other trade analysts say they still expect Trump to press ahead with a global tariff early in his administration.

“The universal tariff was a core part of the economic plan he ran on and I think he’s going to do what he said he would,” said Kelly Ann Shaw, a former White House trade adviser during Trump’s first term.

“This is an idea he’s supported for a long time,” Shaw, now with the Hogan Lovells law firm, said in an interview last week.

Past trade playbook

In his 2017-2021 first term, Trump’s administration used investigations to impose tariffs on steel and aluminum imports and launch duties on some $370 billion (C$530.1 billion)  worth of Chinese imports, igniting a tit-for-tat tariff war between the world’s two largest economies.

The U.S. and China ended the conflict in 2020 with a deal for Beijing to boost its purchases of U.S. exports from farm goods to aircraft by $200 billion (C$286.5 billion) annually but never followed through as the pandemic hit. The forthcoming memo indicates that Trump’s administration will try to push China to keep those commitments.

Trump also had threatened to quit the 1994 North American Free Trade Agreement, blaming it for draining U.S. manufacturing jobs to Mexico and prompting a renegotiation of the trade pact with tighter rules of origin for autos and stronger labor and environmental standards.

Trump won a sunset provision in USMCA that will allow him to renegotiate it again in 2026, and the tariff threats against Mexico and Canada are seen by some trade analysts as a gambit to open those talks early.

—Reporting by Steve Holland, Rami Ayyub, Doina Chiacu, David Lawder and Andrea Shalal

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Biden called the deal a “big win for America” and for tens of thousands of rail workers. Thanking business and labour, the Democratic president promised more worker-company agreements in the future.

“I’m optimistic that we can do this in other fields as well,” Biden said.

“Unions and management can work together for the benefit of everyone,” Biden added.

If they accept the deal that was announced at about 5 a.m., workers whose pay had been frozen will win double-digit increases and will be allowed to seek certain types of medical care without fear of being punished, union leaders said. The agreement includes an immediate 14.1 per cent wage rise, the railroads said.

Unions, whose members bitterly rejected prior proposals, will now vote on the agreement. Even if those votes fail, a rail strike that could have happened as soon as a minute past midnight on Friday has been averted for several weeks due to the standard language included in such a deal, a person familiar with the negotiations said.

Biden’s Labor Secretary Marty Walsh hosted contract talks in Washington that ran for 20 consecutive hours between unions representing 115,000 workers and railroads including Union Pacific, BNSF, CSX, Norfolk Southern and Kansas City Southern, as well as U.S. track owned by Canadian National Railway (CN).

Officials are expected to host a news briefing later on Thursday.

Failing to reach a deal before the deadline would have cleared the way for workers to legally strike.

A rail shutdown could have frozen almost 30 per cent of U.S. cargo shipments by weight, stoked inflation, cost the U.S. economy as much as $2 billion per day and unleashed a cascade of transport woes affecting the U.S. energy, agriculture, manufacturing, healthcare and retail sectors (all figures US$).

U.S. natural gas futures dropped about nine per cent after soaring 10 per cent in the prior session; oil futures fell about four per cent to a one-week low. Diesel and gasoline futures also fell. Investors expected that a rail strike would have threatened coal supplies to power plants and boost demand for rival energy sources.

Amtrak, which runs passenger rail, said it will resume normal service on Friday after cancelling long-distance trains in anticipation of a strike.

The impact of a shutdown also would have stretched beyond U.S. borders because trains link the U.S. to Canada and Mexico and provide vital connections to massive ships that ferry goods from around the globe.

Negotiations between the companies and a dozen unions had stretched for more than two years, leading Biden to appoint an emergency board in July to help break the impasse. Biden personally called Walsh and negotiators on Wednesday evening to prod them toward a deal, telling them “once again to recognize the harm” that a shutdown would have on families, farmers and businesses, according to a person aware of the negotiations.

National Retail Federation CEO Matthew Shay thanked Biden’s administration for intervening, adding in a statement that his group is “relieved and cautiously optimistic.” Emily Skor, CEO of the biofuel trade group Growth Energy, also praised the deal and noted that much of the country’s ethanol moves by rail.

Freight railroads had halted transportation of hazardous goods, including chlorine for water purification and ammonia for fertilizer, as well as shipments of refrigerated food and other goods that use rail and at least one other mode of transport. Their goal was to prevent cargo from being stranded in unsafe locations.

Job cuts

The railroad industry slashed almost 30 per cent of its workforce over the last six years, cutting pay and other costs as they increased profits, stock buybacks and dividends for investors. Profits at billionaire Warren Buffett’s Berkshire Hathaway, which owns BNSF, rose 9.2 per cent in the most recent quarter to $1.7 billion.

The number of U.S. railway workers has dropped from over 600,000 in 1970 to about 150,000 in 2022, according to the Bureau of Labor Statistics, due technology and cost-cutting. The result is that many industry workers are on call at all hours, waiting to respond at short notice to work for days at a time.

The latest deal follows some earlier recommendations of the president’s emergency mediators. It includes a 24 per cent percent wage increase over a five-year period from 2020 through 2024 as well as $1,000 lump sum payments in each of five years.

Biden, who has called himself the most union-friendly president in history and attacked companies for raking in “excessive” profits, praised a deal he said would give workers “better pay, improved working conditions, and peace of mind around their health care costs.”

The president is not yet out of the woods when it comes to supply-chain labour issues. Some 22,000 union workers at 29 West Coast ports that handle almost 40 per cent of U.S. imports are also in high-stakes labour contract negotiations.

Administration officials wanted the disputes resolved ahead of November’s midterm elections that will determine whether Biden’s fellow Democrats retain control of Congress.

Senior congressional leaders had threatened to pass legislation imposing a resolution on the railroads and unions if the negotiations were not successful. U.S. House Speaker Nancy Pelosi praised the tentative agreement and said that Congress was “ready to act” but that “thankfully this action may not be necessary.”

— Reporting by Trevor Hunnicutt in Washington; additional reporting by Lisa Baertlein in Los Angeles, Steve Holland, David Shepardson and Susan Heavey in Washington, Stephanie Kelly in New York, and Jahnavi Nidumolu, Aishwarya Nair, Bansari Mayur Kamdar and Kannaki Deka in Bangalore.

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The closure of the Ambassador Bridge, North America’s busiest international land border crossing and a vital supply route for Detroit’s carmakers, has halted some auto output and left officials scrambling to limit economic damage.

Canadian truckers started their protests as a “Freedom Convoy” occupying Ottawa, the capital, to demonstrate opposition to a vaccinate-or-quarantine mandate for cross-border drivers mirrored by the U.S. government.

They began blocking the Ambassador Bridge on Monday and have since shut two smaller border crossings in Alberta and Manitoba.

As many pandemic-weary western countries near the two-year mark on coronavirus restrictions, copycat protests have spread to Australia, New Zealand and France, although the wave of infections caused by the highly infectious Omicron variant has begun to subside in some places.

U.S. Homeland Security Secretary Alejandro Mayorkas and Transportation Secretary Pete Buttigieg urged their Canadian counterparts “to use federal powers to resolve this situation at our joint border,” a White House official said on Thursday.

“U.S. and Canadian border and customs authorities are working with great urgency to ensure the continued flow of goods and services across our international border, leveraging alternative land routes, as well as air and sea options.”

A U.S. homeland security adviser, Liz Sherwood Randall, is due to speak with Canada’s Deputy Defence Minister Jody Thomas.

Canadian federal ministers have called the blockade illegal and asked protesters to return home. Police near the Ambassador Bridge have begun receiving additional manpower, Drew Dilkens, the mayor of Windsor, which borders Detroit, told CNN.

“(If) the protesters don’t leave, there will have to be a path forward. If that means physically removing them, that means physically removing them, and we’re prepared to do that,” he said.

Dilkens later said Windsor was seeking an injunction from Ontario Superior Court to have the protesters removed, adding he was striving to resolve the issue peacefully.

“(While) it may be gratifying for someone to see the forced removal of the demonstrators, such action may inflame the situation and certainly cause more folks to come here and add to the protest, and we don’t want to risk additional conflict,” Dilkens said.

Diverting cargo

With traffic at times shut in both directions, General Motors and Chrysler’s parent Stellantis said on Thursday they had to cancel or reduce shifts because of parts shortages, tacking on to earlier production cuts announced by Ford Motor Co. and Toyota Motor Corp.

Toyota said it was suspending production through Saturday at its plants in Ontario and Kentucky, affecting manufacturing of the Camry, RAV4 and other popular models.

Ford is looking at flying in some auto parts to a plant in Windsor that produces engines for popular models, a union official said.

The Ambassador Bridge was completely shut from both directions on Thursday as of 3:15 p.m. ET, according to a Reuters witness.

Canadian Prime Minister Justin Trudeau said he was working to end the bridge blockade which hurt “regular Canadians whether it’s grocery store prices, whether it’s jobs lost or suspended, whether it’s supply chains disrupted.”

In a tweet Thursday, Trudeau said he had spoken to Dilkens and said the federal government was ready to help Windsor and the province get the situation under control.

“It is causing real harm to workers and economies on both sides of the border,” he said.

An Ontario court on Thursday froze funds donated to anti-vaccine protesters through the app GiveSendGo. The convoy group had raised more than $8 million as of late Thursday afternoon, the Boston-based company said.

Protesters began gathering with their vehicles in Ottawa nearly two weeks ago and have occupied the main downtown street that runs by Parliament, the Bank of Canada and the prime minister’s office.

More U.S disruption to come?

More than two-thirds of the $511 billion in goods traded annually between Canada and the U.S. is transported by road. The Detroit International Bridge Co., which owns the Ambassador Bridge, urged Canada to end the protest by repealing the vaccine mandate or remove the vehicles so trade can resume.

A third option was to do “nothing and hope this ends on its own: an option that will most likely prolong the blockade, further crippling our economy and putting more jobs at risk,” the company’s chairman, Matt Moroun, said in a statement.

Seeking to show support for the Canadian protesters, some U.S. truckers said they will send two convoys this weekend to a fourth border crossing that connects Buffalo, N.Y. and Fort Erie, Ont.

The U.S. is adding staff to its command post at the National Football League’s Super Bowl in Los Angeles in response to reports of a convoy causing disruptions at Sunday’s game, the White House official said.

The official said in a statement that the Department of Homeland Security was making preparations to ensure that a ‘Freedom Convoy’ event in Washington D.C. due in early March “does not disrupt lawful trade and transportation or interfere with federal government and law enforcement operations and emergency services.”

— Reporting for Reuters by Carlos Osorio,Steve Holland and Ismail Shakil; additional reporting by David Shepardson, Chris Gallagher and Tim Ahmann in Washington, Rod Nickel in Manitoba, Julie Gordon in Ottawa and Brendan O’Brien in Chicago; writing by Rami Ayyub and Costas Pitas.

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The United States imports cattle from Mexico and Canada to supplement domestic supplies at lower prices and to slaughter in American plants run by companies such as Tyson Foods and JBS USA. Bans could reignite trade disputes.

“I read yesterday where we take some cattle in from other countries. We have trade deals. I think you should look at terminating those deals,” Trump said. “We have a lot of cattle in this country.”

Trump made the comments at a White House event held to discuss $19 billion in agricultural relief approved by Congress. He did not mention specific trade deals or countries when talking about cattle.

Live cattle imports come only from Mexico and Canada and are allowed under the terms of Trump’s newly renegotiated North American trade pact.

“If a country’s been a great country and a great ally and a great friend, you know, we have to do that, but there are some countries that are sending us cattle, for many years, and I think we should look at terminating,” Trump said.

Asked later in the same event about the subject, he said, “I’m saying, why are we bringing in cattle, old trade deals that were made a long time ago, why are we bringing in cattle from other countries when we have so much ourselves?”

In “some cases,” he said, without naming any countries, “they’ve been great allies, they’ve been working with us for many years, sometimes we needed the cattle, sometimes we don’t…. Generally speaking, unless this is a country that has been with us, we shouldn’t be taking their cattle.”

“It was something I wish the president hadn’t said,” U.S. National Cattlemen’s Beef Association president Marty Smith, who attended the event, said later. He added the suggestion may have resulted from a misunderstanding.

Oswaldo Chazaro, head of Mexican cattle confederation CNOG, said that while he respected Trump’s opinion, many years had been spent developing an integrated beef market in which all consumers benefit.

“More thought should be given to keeping this healthy, balanced trade in both directions,” said Chazaro.

A potential ban could increase competition for U.S. beef exports if Mexico and Canada keep more cattle at home and process them, said Derrell Peel, livestock marketing specialist at Oklahoma State University.

“Obviously, if we just ban Mexican and Canadian cattle, they’re not going to take that kindly,” Peel said.

According to the U.S. Department of Agriculture, Canada exported over 722,000 head of cattle to the U.S. in 2019, up almost 15 per cent from 2018. In the first quarter of 2020, Canada shipped 184,483 cattle to the U.S., down about eight per cent from the year-earlier period.

Mexico’s beef industry, meanwhile, expects its exports to the U.S. to grow by double digits this year after the pandemic hobbled U.S. meat plants. USDA’s data puts Mexico’s 2019 cattle exports to the U.S. at about 1.32 million head, and its 2020 first-quarter exports at 345,713 head.

Last year, Mexico was the third-biggest foreign beef supplier to the United States, behind Australia and Canada.

The Canadian Cattlemen’s Association on Tuesday described U.S.-Canada beef trade as both “integral” and “mutually beneficial” in a statement posted on its website.

Asked at the same event Tuesday about an extension for the ban on non-essential travel between the U.S. and Canada, Trump described Prime Minister Justin Trudeau as “a friend of ours” and added “we’re very close to Canada; we just signed the USMCA, which is a big deal.”

Separately, U.S. Agriculture Secretary Sonny Perdue said Tuesday the Trump administration would provide aid to U.S. ranchers who had been forced to euthanize livestock.

— Reporting for Reuters by Steve Holland in Washington and Tom Polansek in Chicago; additional reporting by David Alire Garcia in Mexico City, David Ljunggren and Kelsey Johnson in Ottawa; writing by Doina Chiacu and Tom Polansek. Includes files from Glacier FarmMedia Network staff.

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U.S. Treasury Secretary Steven Mnuchin told reporters at the United Nations General Assembly that the trade talks would resume next week with Chinese Vice Premier Liu He returning to Washington to meet with him and U.S. Trade Representative Robert Lighthizer.

Trump, speaking alongside Mnuchin, questioned his Treasury chief about the request that the Chinese delay a trip to meet with U.S. farmers in Montana and Nebraska. Mnuchin had said the trip was delayed at the administration’s request to avoid confusion over the talks.

“Why was that our request, just out of curiosity?” Trump asked.

Mnuchin explained again that the U.S. side “didn’t want confusion around the trade issues.”

Trump then interjected: “Yeah, but I want them to buy farm products.”

“There was no confusion,” Mnuchin replied. “We want them to buy agriculture. They have committed to buy agriculture. And they’re doing that.”

Trump added that China had “committed to buy a lot of agriculture” and the United States should ship the products as fast as possible.

The exchange came after Chicago grain traders said Chinese importers on Monday had bought about 10 boatloads of U.S. soybeans — around 600,000 tonnes — to be shipped from Pacific Northwest ports from October through December. News of the deals sent soybean futures prices higher.

Cancellation of the planned trip cast a pall over conclusion of two days of U.S.-China trade talks last week, sending U.S. stocks lower. People familiar with the talks said that there were no new substantive offers made, but both the U.S. and Chinese sides said the talks were productive, and that minister-level talks would take place in early October.

— Reporting for Reuters by Steve Holland; additional reporting by Jeff Mason, David Lawder and Karl Plume; writing by David Lawder.

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The European Commission has stressed that any beef deal will not increase overall beef imports and that all the beef coming in would be hormone-free, in line with EU food safety rules. The deal needs European Parliament approval.

“The agreement that we sign today will lower trade barriers in Europe and expand access for American farmers and ranchers,” Trump said at a gathering of European Union officials and cowboy-hatted American ranchers in the White House Roosevelt Room for the announcement.

The agreement was then signed by U.S. Trade Representative Robert Lighthizer, Stavros Lambrinidis, the European Union’s ambassador to the United States and EU representative Jani Raappana.

Trump joked that his administration was working with the EU “on a 25 percent tariff on all Mercedes-Benz and BMWs coming into our nation.”

“So, we appreciate – I’m only kidding,” he said to laughter.

But talking to reporters later, he said imposing the tariffs on European autos remained a possibility.

“Auto tariffs are never off the table,” Trump said. “If I don’t get what I want, I’ll have no choice but maybe to do that. But so far they’ve been very good.”

The beef deal could help alleviate some of the damage to the domestic agricultural industry because of tariffs Beijing has imposed on U.S products in retaliation for U.S. levies on China.

Trump said in the first year duty-free U.S. beef exports to the EU will increase by 46 percent and over seven years will rise 90 percent further. “In total the duty-free exports will rise from $150 million to $420 million, an increase of over 180 percent ,” he said.

Without mentioning China by name, Lambrinidis said the United States and Europe could work together to stand against countries that did not compete fairly in the global market.

“The agreement shows us that as partners we can solve problems,” he said.

Quota

EU sources and diplomats in June said a deal had been reached to allow the United States a guaranteed share of a 45,000 tonne European Union quota.

There are 17 U.S. slaughterhouses approved to export beef to Europe, run by companies including Tyson Foods Inc, National Beef Packing Company, Greater Omaha Packing and JBS USA’s Swift Beef Company, according to U.S. Department of Agriculture records.

“Our ability to participate in trade with the EU over the years has been challenged by limitations,” Tyson said. “This agreement provides the opportunity for a more consistent flow of high quality beef product to meet customer and consumer demands.”

Opportunities for U.S. meat producers to export beef to the EU under the quota have been inconsistent as other suppliers such as Australia, Uruguay and Argentina have been approved to ship under the quota.

The U.S. beef industry believes spotty access to the market is a reason why more American farmers do not raise their cattle without hormones, which speed up growth. The EU bans beef from cattle treated with synthetic growth hormones.

“The biggest problem with the European market has been the uncertainty,” said Kent Bacus, director of international trade for the National Cattlemen’s Beef Association, an industry group.

U.S. farmers have suffered from trade disputes with other trading partners, including China and Mexico. China last year imposed retaliatory tariffs on American farm goods including pork.

Friday’s announcement coincides with Trump ratcheting up Washington’s trade dispute with China. On Thursday, he said he would impose a 10 percent tariff on $300 billion of Chinese imports from Sept. 1 and threatened to raise tariffs further if Chinese President Xi Jinping failed to move faster on striking a trade deal.

The dispute between the world’s two top economies has hurt world growth, including in Europe, as it enters its second year.

U.S. and European officials have sought to lay the groundwork for talks on their own trade agreement but have been stymied over an impasse on agriculture.

The agreement on beef could, however, ease tensions between the two sides, which are each other’s largest trading partners.

The Trump administration has been pursuing a host of new trade deals with Europe, China and others as part of the Republican president’s “America First” agenda as he seeks a second term in office, but difficulties in securing final pacts have roiled financial markets.

European stocks on Friday were battered by Trump’s latest salvo against China and Wall Street also took a hit.

– Additional reporting by Andrea Shalal, Jeff Mason and David Alexander and Susan Heavey in Washington, Tom Polansek in Chicago and Foo Yun Chee in Brussels.

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He promised fair trade deals that will put America’s rural heartland back on its feet.

“We’ve taken the toughest ever actions to address China’s unfair trade practices,” Trump told farmers in New Orleans at the American Farm Bureau Federation annual convention, an event he attended for the second year in a row as a partial government shutdown in Washington dragged towards a month.

Why it matters: Keeping farmers on his side will be a key factor in Donald Trump’s re-election bid.

U.S. farmers, numbering some 3.2 million, have been reliable Trump supporters, despite struggling financially since Beijing imposed a tariff on imports of U.S. soybeans in July in retaliation for Trump’s tariffs on Chinese goods.

“With China, every year for many years we’re losing US$375 billion. We’re working on that very strong. You see what’s going on. Doing very well,” Trump said, without providing specific details on the negotiations.

“We’re turning all of that around with fair trade deals that put American farmers, ranchers, and in fact America, first.”

China bought about $12 billion in American soy in 2017, but mostly shifted purchases to Brazil last year because of the trade dispute. The government shutdown meanwhile has delayed applications for federal farm loans and an aid package meant to ease the pain of the trade war.

Trump fell short of addressing the delays caused in aid payments by the shutdown but praised how farmers remained loyal to him.

“No one understands more than our farmers that the tough choices we make today will reap rewards down the road.”

The president authorized about $11 billion in aid payments last year, billing it as a promise kept to a key constituency.

The administration extended the deadline for aid applications because of the processing delays caused by the shutdown over Trump’s demand that Congress fund a wall at the border with Mexico.

Earlier, the crowd was keen to hear about trade.

“I’m hoping to hear about trade. Trade, trade, trade,” said Brian Duncan, an Illinois crop and livestock farmer and vice-president of the Illinois Farm Bureau who was at the convention.

The U.S. Department of Agriculture would like to reopen Farm Service Agency (FSA) offices, and is working with the Office of Management and Budget, agriculture secretary Sonny Perdue said on Fox Business Network Jan. 14.

Steven Mayer, a Nebraska corn, soy and cattle farmer at the convention, said he was waiting for a loan from FSA to build storage bins.

“I’m a Trump supporter and I am trying to keep my hopes up,” he said. “These have been tough times for farmers.”

Trump cancelled a planned visit to the World Economic Forum in Davos, Switzerland, because of the shutdown.

“With everything going on, he’s coming here to talk to us — to farmers,” said Francine Davies, who was at the convention and said most of her family grows crops and works in Wisconsin’s dairy industry. “That means something to us.”

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The announcement came after White House officials disclosed that Trump and his advisers had been considering issuing an executive order to withdraw the U.S. from the trade pact with Canada and Mexico, one of the world’s biggest trading blocs.

The White House said Trump spoke by telephone with Mexican President Enrique Pena Nieto and Canadian Prime Minister Justin Trudeau and that he would hold back from a speedy termination of NAFTA, in what was described as a “pleasant and productive” conversation.

“President Trump agreed not to terminate NAFTA at this time and the leaders agreed to proceed swiftly, according to their required internal procedures, to enable the renegotiation of the NAFTA deal to the benefit of all three countries,” a White House statement said.

“It is my privilege to bring NAFTA up to date through renegotiation. It is an honour to deal with both President Pena Nieto and Prime Minister Trudeau, and I believe that the end result will make all three countries stronger and better,” Trump was quoted as saying in the statement.

The Mexican and Canadian currencies rebounded in Asian trading after Trump said the U.S. would stay in NAFTA for now. The U.S. dollar dropped 0.6 per cent on its Canadian counterpart and one per cent on the peso.

The White House had been considering an executive order exiting NAFTA as early as Trump’s 100th day in office on Saturday, but there was a split among his top advisers over whether to take the step.

During his election campaign Trump threatened to renegotiate NAFTA and in the past week complained bitterly about Canadian trade practices.

It was under an executive order signed by Trump on Jan. 23 that the U.S. pulled out of the sweeping Trans-Pacific Partnership trade deal.

News of the potential presidential action to withdraw from NAFTA earlier drove the Mexican and Canadian currencies lower.

NAFTA trade havoc

A disruption in trade between the three NAFTA partners could wreak havoc in the auto sector and other industries, hitting profits at companies that have benefited from zero-level tariffs and Mexico’s relatively low labour costs. It would also hit U.S. agricultural exports hard.

“To totally abandon that agreement means that those gains are lost,” said Paul Ferley, an economist at Royal Bank of Canada.

Trump has repeatedly vowed to pull out from the 23-year-old trade pact if he is unable to renegotiate it with better terms for the U.S. He has long accused Mexico of destroying U.S. jobs. The United States went from running a small trade surplus with Mexico in the early 1990s to a $63 billion deficit in 2016.

Details about the draft executive order on NAFTA were not immediately available.

Trump has faced some setbacks since he took office in January, including a move by courts to block parts of his orders to limit immigration.

Withdrawing from NAFTA would enable him to say he delivered on one of his key campaign promises, but it could also hurt him in states that voted for him in the election.

“Mr. President, America’s corn farmers helped elect you,” the National Corn Growers Association said in a statement. “Withdrawing from NAFTA would be disastrous for American agriculture.”

Diverging opinions

The first administration source told Reuters that there were diverging opinions within the U.S. government about how to proceed and it was possible that Trump could sign the executive order before the 100-day mark of his presidency.

The source noted that the administration wanted to tread carefully. “There is talk about what steps we can take to start the process of renegotiating or withdrawing from NAFTA,” this source said.

Mexico had expected to start NAFTA renegotiations in August but the possible executive order could add urgency to the timeline.

The Mexican government had no comment on the draft order. The country’s foreign minister said on Tuesday that Mexico would walk away from the negotiating table rather than accept a bad deal.

Trump recently ramped up his criticism of Canada and this week ordered 20 percent tariffs on imports of Canadian softwood lumber, setting a tense tone as the three countries prepared to renegotiate the pact.

Canada said it was ready to come to talks on renewing NAFTA at any time.

“At this moment NAFTA negotiations have not started. Canada is ready to come to the table at any time,” said Alex Lawrence, a spokesman for Canadian Foreign Minister Chrystia Freeland.

— Steve Holland is a Reuters correspondent covering the White House from Washington, D.C. Additional reporting for Reuters by Fergal Smith in Toronto, David Ljunggren in Ottawa, Rodrigo Campos in New York and Julie Ingwersen in Chicago; writing by Jason Lange.

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