Trump calls off tariffs on Mexico after migration deal

US President Donald Trump said on Friday Mexico‘s government had reached a deal with the United States to avert a tariff war by pledging to take “strong measures” to contain the migration of mostly Central Americans crossing the southern US border.

Trump had threatened to impose five percent import tariffs on all Mexican goods from Monday if Mexico did not agree to his demands to tighten its borders. His announcement of a deal came after three days of Mexico-US negotiations in Washington.

“The Tariffs scheduled to be implemented by the US on Monday, against Mexico, are hereby indefinitely suspended,” Trump said on Twitter on Friday evening.

“Mexico, in turn, has agreed to take strong measures to stem the tide of Migration through Mexico, and to our Southern Border. This is being done to greatly reduce, or eliminate, Illegal Immigration coming from Mexico and into the United States,” Trump added.

Details of the agreement would be released shortly by the US State Department, Trump said.

Mexico wants long term solution

US border officers apprehended more than 132,000 people crossing from Mexico in May, the highest monthly level since 2006. Trump, who has railed against what he described as an “invasion,” had threatened to impose levies rising to 25 percent unless Mexico addressed the problem.

Mexico made concessions during the talks, offering to send 6,000 troops to its southern border with Guatemala, but has said it wants to see a long-term solution that would involve economic development aid.

Mexico had prepared a list of possible retaliatory tariffs targeting products from agricultural and industrial states regarded as Trump’s electoral base, a tactic China has also used with an eye towards the Republican president’s 2020 re-election bid.

Imposing tariffs on Mexico would have left the US fighting trade wars with two of its three largest trading partners and would further unnerve financial markets already on edge about a global economic slowdown.

The US slapped tariffs of up to 25 percent on $200bn in Chinese imports last month, prompting Beijing to levy its own tariffs on $60bn in American goods. Trump said on Thursday he would decide later this month whether to hit Beijing with tariffs on an additional list of $300bn in Chinese goods.

Economists say two trade disputes could damage supply lines and pinch consumers at a time when the global economic expansion that followed the 2008 financial crisis has started to sour and the risk of recession has risen.

Economic costs

Even the US, one of the more solid performers on the economic stage, would not be immune to the downdraft.

The US Labor Department reported on Friday that job growth slowed sharply in May and wages rose less than expected, raising fears that a loss of momentum in economic activity could be spreading to the labour market.

US business groups were generally opposed to the tariffs, warning they would raise costs for companies and lead to higher prices for American consumers. Trump’s fellow Republicans were also not keen on the prospect of a two-front trade war.