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The U.S. stock markets have bounced back after President Donald Trump agreed to delay implementing trade tariffs on Mexico.
Following an early morning slump in the U.S. markets, Trump agreed to delay implementing a 25 percent tax on Mexican imports when Mexican President Claudia Sheinbaum pledged to send more troops to her country’s northern border.
Trump’s introduction of trade tariffs in Canada, Mexico and China earlier sparked panic across global financial markets.
Dow Jones Industrial Average fell 557 points in initial morning trading but was down 99 points, or 0.2 percent, as of 11 a.m. The NASDAQ fell about 250 points by mid-morning, which equated to a 1.3 percent decline. The S&P 500 sank 1.7 percent in early Monday trading, following similar losses for markets across Asia and Europe, and was down 0.7 percent in midday trading.
The U.S. stock market had been on track for a much worse loss itself amid worries about how much pain U.S. companies would feel because of the tariffs.
There are concerns that Trump’s tariffs will push up the price of groceries, electronics and household bills for Americans as the president warned Americans might feel “some pain.”
Trump’s tariffs were set to come into force on Tuesday after the president signed a trio of executive orders.
The president said he was due to speak to Canadian Prime Minister Justin Trudeau later on Monday after he announced that Canada would, in return, impose 25 percent tariffs on $106.5 billion of U.S. goods.
“Canada doesn’t even allow U.S. Banks to open or do business there. What’s that all about?” Trump wrote on Truth Social shortly before the U.S. markets opened.
“Many such things, but it’s also a DRUG WAR, and hundreds of thousands of people have died in the U.S. from drugs pouring through the Borders of Mexico and Canada. Just spoke to Justin Trudeau. Will be speaking to him again at 3:00 P.M.”
The U.S. inflation rate has largely been slowing since its peak three summers ago, but stubbornly high or accelerating inflation could keep the Federal Reserve from cutting interest rates, which it began doing in September to give the U.S. economy a boost.
Trump claimed the tariffs are designed to stop the flow of drugs and immigrants from Canada and Mexico, which have been hit with 25 percent tariffs.
Chinese goods will also see a new 10 percent tariff placed on them, with Trump hinting more countries across the world could make the list in the near future.
Over the weekend, Mexico and Canada both announced retaliatory tariffs against the U.S.
