All plans by the U.S. to impose tariffs on goods imported from Mexico were called off bringing in a relief rally in markets on Monday.
On Friday, Mexico has agreed to take action against the illegal flow of migrants to the U.S. after a warning from President Trump about imposing 5 percent as tariffs on all goods imported from Mexico from Monday.
Mexico has agreed to the terms and the tariffs stipulated. Had the tariffs been imposed, it would have affected the Mexican economy, say analysts. A similar agreement is expected between the trade war that is raging between the U.S. and China.
With the tariff threat out of the way, the dollar gained late Friday.
Mexico has agreed to deploy security forces and other steps to prevent the illegal flow of Central American migrants from Mexico.
President Trump has announced that Mexico will eliminate or reduce such illegal migration from its country. Further, he has suspended the tariffs that were to be imposed on Mexico, after the deal was struck.
The markets rebounded on the news. Technology stocks were the highest gainers among the various sectors in the S&P.
However, shares of the two companies that were on a merger, Raytheon Co and United Technologies Corp fell, with the President showing concern on the merger. He says that the merger would remove the competition from the sector.
With the trade war won in Mexico, President Trump is now concentrating on China. He says that many companies are leaving China as they have to pay more tariffs if they continue in China. Companies from the U.S. and from other countries do not want to pay tariffs, he says.
But the success in Mexico will make the President increase the levels of tariffs levied, feel analysts. Joshua Shapiro the chief economist at FR Inc says that protectionism will intensify and not abate, in this scenario.