Retailers can cross Mexican tariffs off their list of troubles — for now.
President Donald Trump revealed late on Friday that the tariffs he planned to impose on close to $350 billion worth of Mexican imports would be shelved after the two sides reached a deal following days of negotiations. The duties were intended to pressure Mexico to curb illegal immigration in the U.S.
“I am pleased to inform you that The United States of America has reached a signed agreement with Mexico. The Tariffs scheduled to be implemented by the U.S. on Monday, against Mexico, are hereby indefinitely suspended,” he tweeted.
But Trump — who likes to keep his friends and enemies guessing — left open the possibility of tariffs down the line if the deal doesn’t pan out.
“There is now going to be great cooperation between Mexico & the USA, something that didn’t exist for decades. However, if for some unknown reason there is not, we can always go back to our previous, very profitable, position of Tariffs — But I don’t believe that will be necessary,” he wrote.
The agreement reached Friday involves Mexico taking unprecedented steps to increase enforcement such as the deployment of its National Guard, according to a joint statement from the two countries. The U.S. will review its progress after 90 days.
Trump added on Twitter that Mexico had also agreed to immediately begin buying large quantities of agricultural product.
The about-turn will come as a relief to retailers, who were taken aback at the start of the month when Trump unexpectedly threatened to place levies on all Mexican imports, starting at 5 percent and rising gradually to 25 percent by October.
As well as disrupting retailers that already have operations in Mexico, the move would have impacted those looking to shift some production to the country if the Trump administration follows through with its threat to place tariffs on all Chinese imports.
Retailers still have to grapple with the prospect of yet more tariffs on Chinese imports.
After accusing China of reneging on a number of commitments last month, the White House pledged to start the paperwork to target all other imports that have yet to be targeted in previous rounds. This tranche would add up to $325 billion and drag apparel and footwear into the fray for the first time.
Trump last week gave more guidance on the timing of this when he said that a final decision would be made after the G20 meeting in Japan, scheduled for the end of June. That is the first time he is expected to meet with China’s President Xi Jinping since trade negotiations between the two sides imploded last month.
U.S Treasury Secretary Steven Mnuchin told CNBC this weekend that if China doesn’t want to move forward, then Trump is “perfectly happy to move forward with tariffs to re-balance the relationship.”