While President Donald Trump has put his tariff threats against Canada and Mexico on hold, manufacturers aren’t taking any chances.

The potential for new 25% tariffs just four weeks from now has prompted companies to speed up delivery of orders and scramble for ways to protect their supply chains.

Take Iggy Domaglaski, who runs Toronto-based Wajax. He imports heavy industrial equipment like dump trucks and excavators, including from the US — and is not letting his guard down. “We will assume something is going to happen until we find out that it’s not,” he said.

That caution speaks for manufacturing executives across the spectrum. Their concern is that Trump could revive his tariff warnings at a moment’s notice. The trade truce hinges on Canada and Mexico taking tougher measures to combat migration and drug trafficking at the border.

Read More: Biggest American Trade Crossing Gets a Tariff Reprieve, for Now

Canada promised to appoint a new fentanyl czar, list cartels as terrorists and join the US in creating a new “strike force” to fight organized crime, drug trafficking and money laundering, among other measures. Mexico promised to send 10,000 National Guard officers to the border to help stem the flow of fentanyl and migration into the US.

But that’s only part of the full story we report today.

Trump has also warned Canada about it’s trade surplus with the US and has repeatedly vowed that America doesn’t need to buy the produce that it does from its northern neighbor. A trade agreement between the US, Canada and Mexico — the USMCA — is up for negotiation next year, meaning the protracted discussions have only just begun. Trump says tariffs will attract investment to the US and create jobs.

There are a lot of dollars at stake. Trade in goods and services between Canada and the US was about $920 billion in 2023, while trade between Mexico and the US was nearly $900 billion, according to data from the US Department of Commerce.

Read More: Canada Fumes, Fears Lost Business With Trump Trade Talks Ahead

Chip McElroy’s namesake company, based in Tulsa, Oklahoma, creates thermoplastic fusion equipment that include semiconductor fabs, data centers and power plants. The business relies on imported materials from Canada and Mexico, and the tariffs as proposed would have cost an estimated $2 million over the next 12 months — charges he would need to pass along to customers.

“This latest salvo of tariffs is hugely problematic,” McElroy said. Sourcing his entire supply chain in the US isn’t simple. “Even if we could wave a magic wand tomorrow, there are things that we need from our trading partners to the north and to the south and even from the east.”

His biggest fear: a cycle of retaliation. “It is going to be very, very bad for our business and very bad for the US economy and ultimately very bad for our workforce,” he cautioned.

Related Reading:

• Trump Tariffs Risk $29,000 Rise in US Home Building Costs
• Trade War Reality Greets Chinese Traders on Holiday Return
• Price Hike Gets Reversed in Six Hours on Trump Tariff Flip-Flop
• Daly Says Fed Can Take Its Time Reacting to Trump Policies
• How US Tariffs Work — and Who Foots the Bill: QuickTake

—Enda Curran in Washington

Click here for more of Bloomberg.com’s most-read stories about trade, supply chains and shipping. 

Charted Territory

Canal diary | Panama is weighing whether to cancel its contract with the Hong Kong-based company thatoperates ports near the waterway. Meanwhile, Panama’s Jose Raul Mulino had clamped down on migration routes and declared his country the new southern border for the US. All that came before Trump came asking for the one thing the president of the tiny Central American country could never cede — control of the waterway.

Today’s Must Reads

• China’s antitrust watchdog is laying the groundwork for a potential probe into Apple’s policies and the fees it charges app developers. Meanwhile, China extended its support for the yuan by setting its daily reference rate for the managed currency at a level stronger than 7.2 per dollar, as escalating trade tensions with the US add to the depreciation pressure on the yuan.
• The European Union is preparing for a transatlantic trade fight, but Trump’s decision to delay broad tariffs on Mexico and Canada this week has bolstered confidence in the bloc that it will be able to negotiate an acceptable outcome.
• Thai companies want the government to step up efforts to shield local producers from a potential influx of cheap goods following the Trump administration’s move to slap tariffs on Chinese imports.
• Ireland’s foreign and trade minister will seek approval to establish a US-based body that will advise the government on how to deal with any potential policy changes from the Trump administration.
• Zimbabwean President Emmerson Mnangagwa’s six years of wooing the United Arab Emirates has given a lifeline to a nation that the West has ostracized for a quarter century and is unable to repay its loans to China.
• Customs brokers, freight companies, and business owners in Laredo, Texas, rushed to move cargo ahead of new tariffs on Mexican imports threatened by the Trump administration, but the tariffs were delayed by a month.
• Enphase Energy, a US solar and battery systems supplier, is in the process of moving its battery cell manufacturing out of China to avoid tariffs.

Trump’s threats to hit the EU with tariffs have left the bloc’s leaders scrambling at the prospect of a trade war with the US. Bloomberg’s Caroline Hepker, Alice Gledhill, Kevin Whitelaw and Craig Trudell will discuss how the ramped up protectionist rhetoric could hit markets, the effect it’s already having, how it’s impacting international relations — and what, if anything, Europe can do to prepare for the threat potentially becoming reality. Join our Live Q&A on Feb. 5 at 8 a.m. EST.

On the Bloomberg Terminal

• A fragile North American freight economy could be buffeted by demand, cost and earnings headwinds from US tariffs, which tend to weigh on economic growth and can be inflationary, according to Bloomberg Intelligence.
• China Gas, one of the country’s biggest distributors of the fuel, said it would stop seeking new US LNG deals as profits are set to be squeezed by the new tariffs. 
• Run SPLC after an equity ticker on Bloomberg to show critical data about a company's suppliers, customers and peers.
• Use the AHOY function to track global commodities trade flows.
• See DSET CHOKE for a dataset to monitor shipping chokepoints. 
• For freight dashboards, see BI RAIL, BI TRCK and BI SHIP and BI 3PLS
• Click HERE for automated stories about supply chains.
• On the Bloomberg Terminal, type NH FWV for FreightWaves content.
• See BNEF for BloombergNEF’s analysis of clean energy, advanced transport, digital industry, innovative materials, and commodities.

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