The deals President Trump made this week with Canada and Mexico to staunch the flow of fentanyl and undocumented migrants into the U.S. serve as a classic example of one of the rationales for imposing tariffs. They’re not only for raising money, narrowing trade deficits, and protecting domestic manufacturing and local jobs. They can also exert leverage to promote national security.

And national security was top of mind when the Trump administration announced plans to impose import duties on America’s three largest trading partners: 25% in additional tariffs on imports from Canada and Mexico and an additional 10% on goods from China, according to a report from the White House.

“The extraordinary threat posed by illegal aliens and drugs, including deadly fentanyl, constitutes a national emergency under the International Emergency Powers Act,” the report said, citing a federal law enacted in 1977 to authorize the president to regulate commerce after declaring a national emergency.

More than 107,000 Americans died of overdoses in 2023 after taking illicit drugs laced with fentanyl, according to the U.S. Centers for Disease Control. About 11 million undocumented immigrants lived in the United States as of 2022 and accounted for 3.3% of the population, the American Immigration Council said.

Those stats would undoubtedly convince lots of Americans that the administration’s move against neighboring countries was justified. It was also a classic use of tariffs, noted Jamie Dimon, chairman and CEO of JPMorganChase, the world’s largest bank as measured by market capitalization.

“I would put [tariffs] in perspective: If it’s a little inflationary, but it’s good for national security, so be it. I mean, get over it,” Dimon told CNBC in an interview late last month at the World Economic Forum in Davos, Switzerland. The conversation took place in the earliest days of the second Trump administration, but even then the White House was already threatening to slap higher tariffs on goods from Canada, Mexico and China.

Those ultimatums apparently had the desired effect, just as Dimon predicted when he said tariffs could “bring people to the table” to hash out trade agreements. The threats grabbed the attention of Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau. Both were on the phone with Trump on Monday to talk border policy in the hope of canceling or at least postponing the import duties. They were bargaining just hours before the measures were scheduled to take effect.

Here’s what we know about the negotiations conducted in Trump’s separate last-minute phone calls with the leaders of America’s neighbors.

Exchanging allegations and promises with Mexico

The U.S. agreed to postpone the new tariffs on Mexico 30 days. In exchange, Sheinbaum pledged to send more Mexican National Guard troops to the border, and Trump promised to block the flow of arms from the U.S. into the hands of drug cartels operating just across the border in Mexico.

“Mexico will reinforce the northern border with 10,000 members of the National Guard immediately, to stop drug trafficking from Mexico to the United States, in particular fentanyl,” Sheinbaum posted on social media, a CBS News report said. “The United States commits to work to stop the trafficking of high-powered weapons to Mexico.”

Mexican officials praised Sheinbaum’s handling of the tariff negotiations. The country was already using National Guard troops to patrol the border and only has to increase their numbers and reaffirm their commitment to drug arrests. Mexico has besieged the U.S. to stem the tide of sophisticated weaponry into Mexico and scored a victory there.

What could be viewed as a win-win agreement seemed far from certain before the phone call. Written and verbal exchanges leading up to the agreement weren’t amiable. Trump accused the Mexican government of colluding with murderous drug cartels, an allegation Sheinbaum characterized as “slander.”

She had returned fire in the war of words that preceded the call. “If the United States government and its agencies wanted to address the serious consumption of fentanyl in their country,” CBS quoted Sheinbaum as saying, “they can combat the sale of narcotics on the streets of their main cities, which they don’t do, and the money laundering generated by this illegal activity that has done so much harm to their population.”

After the call with Sheinbaum concluded on Monday, Trump and Trudeau got on the phone.

Canada and U.S. strike a deal

Trudeau told Trump Canada would commit more resources to combatting the spread of fentanyl. More specifically, America’s neighbor to the north committed to spending $1.3 billion on helicopters and personnel at the border and appoint a “Fentanyl Czar” to oversee efforts to stop the flow of the drug into the U.S.

But many in the Great White North probably couldn’t see what all the fuss was about or understand why Trump was threatening to damage international trade by imposing duties on imports. They might argue Canada isn’t to blame for U.S. problems with immigration or drug overdoses.

Here’s an example: Since September, U.S. law enforcement agencies have seized 4,500 pounds of fentanyl at the borders, according to a BBC report this week on figures from the U.S. Customs and Border Patrol. Almost all (98%) was intercepted at the border with Mexico, and less than 1% was seized at the Canadian border. The rest came mostly by sea.

What’s more, not that many undocumented migrants are entering the U.S. through the 5,500-mile-long border with Canada. In fiscal year 2024, which ended Sept. 30, the Border Patrol apprehended 23,721 people who illegally crossed the northern border into the U.S. said FactCheck.org, based on data from the U.S. Customs and Border Protection website. That’s about 1.5% of Border Patrol apprehensions nationwide. By comparison, the Border patrol arrested more than 1.5 million people who illegally entered the U.S. through the border with Mexico.

Negotiations with Canada and Mexico aside, we should also mention lots of Wall Streeters considered the proposed tariffs a bluff instead of threat. The markets dipped after the Trump administration announced the tariffs were coming, and that fact alone may have nudged the president into backing off for a month, some observers contend.

There’s also the question of whether presidents are empowered to issue tariffs. Generally, Congress is expected to handle them, and the president can invoke the only in emergencies. And what constitutes an emergency is anyone’s guess.

But, wait. What about China?

China retaliates against the tariffs

The 10% tariffs on all Chinese imports went into effect Tuesday, and the keepers of the world’s second-largest economy reacted by placing tariffs on China-bound American shipments of natural gas, coal and other products.

Chinese officials also asked companies around the world not to ship rare earth minerals mined in China to the United States, where they would be used to produce high-tech products.

China also urged other trading partners, especially those based in Europe, to build supply chains linked to China instead of to the U.S. Plus, China announced it would continue its anti-monopoly investigations of the Google platform owned by Alphabet (GOOG).

And those actions could be just the beginning of the painful fallout Americans will endure if Trump decides to reintroduce the Mexican and Canadian tariffs after the 30-day halt.

Contrary to Trump’s insistence that other countries pay when the U.S. places tariffs on their exports, the bill goes to the American importer—who then passes it on to American consumers.

Ed McKinley is Luckbox editor-in-chief.