The U.S. calls off planned Mexico tariffs

The United States and Mexico have reached an agreement that has seen tariffs scheduled to take effect on Monday, June 10 “indefinitely suspended.”

The U.S. president Donald Trump said on Friday that Mexico’s government had on its part pledged “strong measures” aimed at stopping illegal immigration into the U.S. via its borders.

The two countries issued a joint declaration in which Mexico agreed to do more to curb irregular migration. Among these measures is the deployment of more police to slow the massive migration that comes from Central America.

The U.S. will now send asylum seekers who cross into the U.S. back into Mexico, pending the outcome of their applications. The Mexican government said that asylum seekers will get access to jobs, health care, and education.

Meanwhile, the U.S. will accelerate the processing of asylum claims, with removal proceedings handled “expeditiously.”

Trump’s surprise move targeting Mexico with 5% tariffs that would have risen to 25% by October shook global markets. It only added to the uncertainty that has gripped markets since early May following escalations in the Sino-U.S. trade war.

The Dow declined 3% in the week ending May 31, the sixth straight week of declines and the longest downtrend since 2011. The tariff threat on Mexico saw the peso plunge, with automakers like GM, Ford, and Fiat under pressure.

The rising concerns on the potential economic impact of another trade war saw the U.S. Federal Reserve note that it was “monitoring the implications” and would act appropriately.

The market cheered these sentiments, with the Dow closing higher on Friday as talk of interest rates cuts excited investors. Trump’s announcement regarding the suspension of tariffs on Mexico saw the Dow surged more than 250 points.

Earlier, Mexico’s president Andres Manuel Lopez Obrado and a major commerce group in the U.S. had called on Trump to rethink his decision. Officials from Mexico and the U.S. also held talks this week, with Trump indicating that it was possible to avert the tariffs.