Trump had directed on Saturday that 25 per cent tariffs on most imports from the two American partners—and 10 per cent on Canadian energy products—would go into effect at midnight Tuesday.
In a statement on X, Canadian Prime Minister Justin Trudeau said that on a call with Trump, he pledged additional cooperation on border security. This follows similar moves by Mexico earlier.
"Proposed tariffs will be paused for at least 30 days while we work together," Trudeau said.
Mexican President Claudia Sheinbaum said the agreement also includes a U.S. commitment to act to prevent the trafficking of high-powered weapons to Mexico.
The two leaders spoke by phone on Monday, just hours before U.S. tariffs on Mexico, China and Canada were set to take effect.
Trump said that Mexico and the U.S. will use the month-long pause to negotiate further.
"We have this month to work and convince each other that this is the best way forward," Sheinbaum said at a press conference.
A White House advisor earlier on Monday said the administration had noticed that Mexico was "serious" about Trump's executive order on tariffs.
"The good news is that in our conversations over the weekend, one of the things we've noticed is that Mexicans are very, very serious about doing what President Trump said," White House National Economic Council Director Kevin Hassett said on CNBC.
"President Trump was absolutely 100 per cent clear that this is not a trade war, this is a drug war."
The latest twist in the tariffs saga sent the Canadian dollar soaring after slumping to its lowest in more than two decades. The news also lifted U.S. stock index futures after a day of losses on Wall Street.
In Washington, D.C., on Sunday, Trump indicated that the 27-member European Union would be next in line but did not say when.
"They don't take our cars, they don't take our farm products. They take almost nothing and we take everything from them," Trump told reporters.
On Monday, EU leaders meeting at an informal summit in Brussels said Europe would be prepared to fight back if the U.S. imposes tariffs but also called for reason and negotiation.
EU foreign policy chief Kaja Kallas said that if the U.S. and Europe start a trade war, "then the one laughing on the side is China."
Economists said the plan to impose 25 per cent tariffs on Canada and Mexico and 10 per cent tariffs on China would slow global growth and drive prices higher for people in the U.S.
Trump says they are needed to curb immigration and narcotics trafficking and spur domestic industries.
ING analysts wrote that Trump's tariffs would cover almost half of all U.S. imports and would require the United States to more than double its own manufacturing output to cover the gap—an unfeasible task in the near term.
With AAP.
