Market sentiment rebounded sharply after the US announced a one-month pause on planned tariffs against Mexico, following an agreement on border security measures. DOW recovered to around 44,400 after initially dropping to 43,920 in early trading, reflecting renewed optimism that negotiations could lead to a resolution despite the aggressive tariff rhetoric from the US administration.
The shift in tone was confirmed by President Donald Trump’s Truth Social post, where he stated that he had a “very friendly conversation” with Mexico’s President Claudia Sheinbaum. As part of the agreement, Mexico will deploy 10,000 soldiers along its border with the US to curb fentanyl trafficking and illegal migration. Trump also announced that high-level negotiations, led by key officials including Secretary of State Marco Rubio, will take place over the next month to work toward a “deal.”
The move suggests that while tariffs remain a significant geopolitical risk, there is room for diplomatic efforts to prevent further economic disruption. The pause in Mexican tariffs could set a precedent for similar discussions with Canada and China, though uncertainty remains high regarding the administration’s broader trade strategy. For now, markets appear to be viewing this as a sign that Trump’s threats may be a negotiating tactic rather than an immediate escalation.
