By Michael Every of Rabobank

The North American trade war is over before it started, as US tariffs on Mexico and Canada have been paused for 30 days after both offered full cooperation over fentanyl and made 10,000 police officers or military available at the border. So, 20,000 people are paying attention to this problem so millions globally don’t have to keep following it 24/7 in markets.

Everyone gets to say, “See!”: the Trump tariff “because markets” denialists; those who see Trump as having caved after burning US political capital; and those who see Mexico and Canada as having caved, following Colombia, Panama, and perhaps Greenland (which is to ban foreign influence in its next election on 6 April: good luck with that).

The next 30 days, in which Treasury‘s Bessent, State’s Rubio, and Commerce’s Lutnick --all (checks notes) ‘fentanyl experts’-- discuss the border and trade with Mexico will be critical for determining what just happened and is likely to happen next. The waters may be muddy, but it looks like a looming Monroe Doctrine Pan-North American trade stance is being prepared, as flagged yesterday.

Likewise, the reform-minded and muscular “economic statecraft, eh?” Canada that has re-emerged after a decade of torpor is also precisely what the US wants to see – if it can turn it around to face outside North America.

But back to some of the 20,000 Ledes under the “See!”

Those thinking tariffs are not a thing need to consider that Europe is likely next in the firing line – and it doesn’t have a fentanyl issue or a common border with the US (yet). What is the potential deal there? And what if the North America is being reordered to greater purpose than “because markets”?

Relatedly, Trump said new 10% tariffs on China were an “opening salvo” and will go higher without a deal there too – and will speak to Beijing within the next 24 hours on the topic. So, another reprieve and another “See!”?

Look deeper!

China is suggesting a return to the Farce One Trade Deal, which seems unlikely to sell, and to not devalue CNY, which brings FX policy into the open as the economic statecraft it actually is rather than the polite “market” we describe. At the same time, those who have read the recent Trump Executive Order on trade will have noticed the slew of national-security related China-focused investigations already underway, and which are unlikely to only conclude that a 10% tariff is an appropriate palliative:

In short, expect much more volatility ahead, almost everywhere: see our Australia-New Zealand strategist Ben Picton’s take on what economic statecraft means for those two economies.

Without meaning to repeat the meme endlessly, it is still all about economic statecraft right now:

There is also drama on a relatively smaller, but still market-moving scale in Europe:

Looking at all this, it’s not surprising that the Fed’s Bostic yesterday stated that the uncertain outlook for the US economy and inflation argues for a wait-and-see approach on rates in 2025. He could also have said 20:25, as in this evening, and it would also have been accurate.