As fears of a damaging global trade war mounted, Trump and his Mexican counterpart Claudia Sheinbaum announced the halt after she agreed to send 10,000 troops to the US-Mexico frontier to stop the flow of the drug fentanyl.

Republican Trump said that after the "very friendly" talks he had agreed to "immediately pause" the 25 percent tariffs on Mexico, hours before they were due to take effect.

There would now be further talks for a long-term deal, said Trump, who had media tycoon Rupert Murdoch in the Oval Office as he signed a number of executive orders.

Leftist Sheinbaum said she had a "good conversation with President Trump with much respect for our relationship and sovereignty."

But despite a "good talk" with Canadian Prime Minister Justin Trudeau early Monday, Trump said there was still no agreement. The two leaders were due to talk again later Monday.

"Canada is very tough to do business with," said Trump, who is also imposing 25 percent tariffs on Ottawa.

Trump said last-minute talks between Washington and Beijing will likely be held "probably in the next 24 hours" to avoid new tariffs on Chinese imports.

China, the top economic competitor to the United States, faces a further 10 percent duty on top of existing levies.

- Stocks slump -

Canada, China and Mexico are the United States's three biggest trading partners, and Trump's threatened tariffs have sent shock waves through the global economy.

Wall Street's three main indices fell sharply in early deals, but clawed back ground after Trump's announcement on the Mexico deal.

The London, Paris and Frankfurt stock markets finished in the red as Trump warned over the weekend that the European Union would be next in the firing line and did not rule out tariffs on Britain.

The Mexican peso and Canadian dollar also sank against the greenback, while oil jumped despite Trump limiting the levy on Canada's energy imports at 10 percent to avoid a spike in fuel prices.

The White House said earlier there had been a "heck of a lot of talks" over the weekend -- and that they had gone better with Mexico than Canada.

"This is not a trade war, this is a drug war," National Economic Council Director Kevin Hassett told CNBC.

"The Mexicans are very, very serious about doing what President Trump said" in his order imposing the tariffs, he said. "But the Canadians appeared to have misunderstood the plain language."

US government figures show that only a minimal quantity of drugs comes via Canada.

- 51st state? -

Canada has vowed to respond strongly to the tariffs.

Its most populous province Ontario on Monday banned US firms from bidding on tens of billions of dollars in government contracts -- and dumped a deal with Elon Musk's Starlink.

Musk is running a cost-cutting drive in Trump's White House that, in a separate development, could shut down the US Agency for International Development.

"Ontario won't do business with people hellbent on destroying our economy," Ontario Premier Doug Ford said on X.

Trump has upped the pressure recently by calling Canada's existence into question -- once again calling on Monday for it to become the 51st US state.

The US president -- who has said that tariff is the "most beautiful word in the dictionary" -- is going even further in his second term on the levies than he did in his first.

He has insisted that the impact would be borne by foreign exporters without being passed on to American consumers, despite most experts saying the contrary.

But the billionaire 78-year-old did acknowledge as he returned from a weekend at his Florida resort Sunday that Americans might feel economic "pain".

Trump has also wielded tariffs as a threat to achieve his wider policy goals, most recently when he said he would slap them on Colombia when it turned back US military planes carrying deported migrants.