The US tariffs on Mexico have been paused for one month following discussions between President Donald Trump and Mexican President Claudia Sheinbaum. Key details of this agreement include:
- Duration: The 25% tariffs on Mexican goods, which were set to take effect at midnight on February 4, 2025, have been suspended for one month12.
- Border security: Mexico has agreed to deploy 10,000 National Guard troops to its northern border with the United States13.
- Focus on drug trafficking: The additional troops will primarily target the flow of illegal drugs, particularly fentanyl, into the United States14.
- Bilateral cooperation: The United States has committed to working on stopping the flow of high-powered weapons into Mexico from the US1.
- Ongoing negotiations: Both countries will use this month-long pause to engage in further negotiations on security and commerce issues4.
- Economic impact: The peso, which had been trading down over 1% against the dollar, reversed course and traded in positive territory after the announcement1.
- Broader context: This pause comes as part of a larger set of tariff threats by the Trump administration, which also included potential tariffs on Canada and China24.
The agreement aims to address both countries’ concerns while providing time for more comprehensive solutions to be developed.
Global markets reacted positively to the news of the tariff pause between the United States and Mexico:
- The Mexican peso reversed its downward trend and traded in positive territory after the announcement4.
- U.S. stock futures initially dropped but have since stabilized as investors assess the implications of the tariff pause4.
- European markets showed signs of relief, with futures for major indexes recovering some of their earlier losses4.
- Asian markets, particularly Japan’s Nikkei 225, which had declined by 1.57% earlier, saw a slight recovery in response to the news4.
- Oil prices edged up by 0.35%, partly due to the easing of trade tensions but also influenced by hopes for a ceasefire between Israel and Hezbollah in Lebanon4.
- Gold prices remained steady at $2,618.49, reflecting a cautious investor sentiment amidst the volatile trade environment4.
The market reaction demonstrates that investors view the tariff pause as a positive development, potentially reducing the immediate risk of a trade war. However, the response remains measured, indicating that market participants are still wary of ongoing trade negotiations and potential future tariff threats.