FxWirePro: Trump triggers risk aversion with tariffs on Mexico

Friday, May 31, 2019 7:29 AM UTC

As predicted, the Trump administration toughening its stance on the pending issues - both geopolitical and economic.

In a previous post, we warned readers that the clouds of tariffs are going to hang over Mexico for years to come as it was clear from the U.S. foreign policy towards Mexico and there isn’t much Mexico can do retaliating against its overlarge neighbors.

Here is the warning, in case you missed it, https://www.youtube.com/watch?v=f9n2odGBNjY

Key highlights:

President Trump cleared that if the millions of asylum seekers from Central America continue to march through Mexico without being apprehended and reaches the southern border of the United States, he would first put a penalty on cars coming to the United States from Mexico.
He hinted that Mexico needs to ratify the newly reached agreement, known as the ‘U.S.M.C.A.’, he would move ahead with the tariffs.
Even if Mexico chooses to live with the agreement, the tariff clouds would still remain as he announces a one-year ultimatum that if Mexico doesn’t reduce the amount of drug coming through Mexico to the United States, through the southern border, he would tariff the cars.
And, in the worst case, the border would be closed in case the migrant caravan reaches the U.S. border.

And now, the President has followed through his words by announcing on Twitter, “On June 10th, the United States will impose a 5% Tariff on all goods coming into our Country from Mexico, until such time as illegal migrants coming through Mexico, and into our Country, STOP. The Tariff will gradually increase until the Illegal Immigration problem is remedied.....at which time the Tariffs will be removed. Details from the White House to follow.”

Risk aversion is clearly the winner of the day as tariff friction gathers pace,