President Donald Trump said he extended Mexico’s current tariff rates for 90 days to allow more time for trade negotiations with the US’ southern neighbor.

Earlier this month, the US president had threatened to impose 30% tariffs on Mexico’s exports starting on August 1, saying President Claudia Sheinbaum’s government hadn’t done enough to help secure their shared border.

“The complexities of a Deal with Mexico are somewhat different than other Nations because of both the problems, and assets, of the Border,” Trump said Thursday in a social media post, following a call with Sheinbaum. His decision comes shortly after he said he would not extend his Friday deadline.

For now, Mexico will continue to pay a 25% fentanyl tariff, a 25% tariff on cars, and a 50% tariff on steel, aluminum and copper, Trump said, adding that the country had also agreed to immediately terminate its “non-tariff trade barriers.”

The Mexican peso jumped to a session high on the news, before paring gains to trade 0.4% higher at 18.8193 per dollar as of 11:15am In New York.

Sheinbaum described the conversation with Trump as “really good” and said both countries have 90 days to build a long-term deal.

Since the beginning of trade talks, Sheinbaum has pledged a “cool-headed” approach to negotiations with Trump, avoiding the quick retaliation that other countries had taken. Trump placed a 25% tariff on Mexican goods earlier this year, but included exemptions for goods covered by the US-Mexico-Canada agreement, or USMCA, which includes the majority of Mexican exports.

But the resolve of Mexican negotiators has been wearing thin as the US has gone ahead with tariffs that affect major export industries, from autos to steel and aluminum. Mexican cabinet members traveled frequently to Washington to sit down with Commerce Secretary Howard Lutnick and other top officials.

Trump set an August 1 deadline for a new round of rate hikes on imports from countries that haven’t struck deals with the US, even while the global tariffs face legal challenges in court. He has reached agreement with Japan and the European Union in recent days, following negotiations with countries including the Philippines and Vietnam.

The US president also backed away from a full 50% tariff on goods from Brazil, Latin America’s largest economy, with major exports including civilian aircrafts and orange juice now slated to maintain their current 10% rate.

Mexico is the US’s number one trade partner, part of the government’s argument for why it should be given special treatment. About 83% of US imports from Mexico were exempt from tariffs in May, according to a Bloomberg Economics analysis of data from the Commerce Department’s Census Bureau.

Source: Bloomberg

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