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Dow Jones rises 150 points after US suspends planned Mexican tariffs

The Dow Jones surges after the US and Mexico make a deal to avoid US tariffs on Mexican goods.

The Dow Jones is climbing after US President, Donald Trump, announced that he would cancel proposed tariffs on Mexican imports. Trump threatened to place a 5% tariff on Mexican goods to force the Mexican government to act on Mexican and Central American undocumented immigration into the US.

US and Mexico strike immigration deal to stop impending tariffs

US President, Donald Trump, wrote in a Twitter post about the US border security pact with Mexico.

‘We have fully signed and documented another very important part of the Immigration and Security deal with Mexico, one that the US has been asking about getting for many years. It will be revealed in the not too distant future and will need a vote by Mexico’s legislative body,’ tweeted Trump.

Trump still threatened to impose tariffs if the Mexican government didn’t vote for the immigration deal.

‘We do not anticipate a problem with the vote but, if for any reason the approval is not forthcoming, tariffs will be reinstated,’ tweeted Trump.

Immigration deal details

As part of the agreement, Mexico will place 6000 members of the country's National Guard along the Mexico-Guatemala border to deter Central American people from crossing that border to travel to the US.

The two nations also agreed to speed up a program already implemented in December 2018 that will keep Central American asylum seekers in Mexico as they wait to enter the US.

The deal has been praised by US automakers that are dependent on Mexico for auto parts. The suspension of Mexican tariffs was also a relief to supporters of the US-Mexico-Canada Agreement (USMCA). The USMCA could be closer to being ratified with the suspension of Mexican tariffs.

More trade disputes could impact Dow Jones

While the Mexico trade dispute has been settled for now, there is still concern about the US-China trade impasse and possible tariffs on European cars. Jason Pride, chief investment officer at Glenmede Investment Management, noted that the US economy could be affected by other trade conflicts.

‘Even though Mexican tariffs are now off the table at this point, risks to the economy lie in further trade escalation, as the impact of tariffs on the rest of Chinese goods and new duties on European autos would likely have a larger effect on economic growth,’ said Pride.

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