Trump Gives Mexico 90-Day Reprieve From Higher Tariffs

President Donald Trump extended Mexico’s current tariff rates for 90 days to allow more time for trade negotiations, again relenting after threatening to raise levies on a major trading partner.

Earlier this month, the US president had signaled plans to hike tariffs on Mexico’s exports to 30% from 25% starting on Aug. 1, saying President Claudia Sheinbaum’s government hadn’t done enough to help secure their shared border. Many goods certified under a free-trade pact between the countries and Canada have remained exempt.

“The complexities of a Deal with Mexico are somewhat different than other Nations because of both the problems, and assets, of the Border,” Trump said Thursday in a social media post, following a call with Sheinbaum. The goal now is “signing a Trade Deal somewhere within the 90 Day period of time, or longer,” he said.

Beyond postponing the tariff increase, the biggest relief for Mexico is the continuation of the exemption of goods under the US-Mexico-Canada trade pact, or USCMA. That exception has insulated Mexico from a deeper economic impact from tariffs related to fentanyl trafficking, imposed earlier this year. Still, a separate 25% levy on cars and 50% on steel and aluminum have been a drag on growth.

The Mexican peso jumped to a session high on the news, before paring gains to trade 0.4% higher at 18.8193 per dollar as of 11:15 a.m. In New York.

Trump said Mexico had also agreed to immediately terminate its “non-tariff trade barriers,” without specifying. In her own social-media post, Sheinbaum said it was a “really good call,” but didn’t offer further details. She is due to speak to the press later this morning.

Bloomberg's Tyler Kendall reports.

Trump set an Aug. 1 deadline for a new round of rate hikes on imports from countries that haven’t struck deals with the US, even while the global tariffs face legal challenges in court. He has reached agreements with Japan and the European Union in recent days, following negotiations with countries including the Philippines and Vietnam.

And following a pattern that has flummoxed traders, Trump has often backed down unilaterally from his most severe threats. The US president stopped short this week of imposing a full 50% tariff on goods from Brazil, Latin America’s largest economy, with major exports including civilian aircrafts and orange juice now slated to maintain their current 10% rate. New tariff rules on copper also were less severe than expected.

Since the beginning of Mexico’s trade talks with the US, Sheinbaum has pledged a “cool-headed” approach to negotiations with Trump, avoiding the quick retaliation that other countries had taken.

But the resolve of Mexican negotiators has been wearing thin as the US has gone ahead with tariffs that affect major export industries, especially autos and steel. Mexican cabinet members traveled frequently to Washington to sit down with Commerce Secretary Howard Lutnick and other top officials.

Mexico is the US’s No. 1 trade partner, part of the government’s argument for why it should be given special treatment. About 83% of US imports from Mexico were exempt from tariffs in May, according to a Bloomberg Economics analysis of data from the Commerce Department’s Census Bureau.

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