“President Trump will stand strong until Mexico takes action”, Mike Pence said on Thursday evening, following a second day of negotiations between US officials and a baffled Mexican delegation, dispatched to Washington this week to try and avert across-the-board tariffs scheduled to kick in on Monday.
Talks ended with no deal on Wednesday and it appears as though there was no sweeping agreement on Thursday either. Although Mexico made further proposals, they weren’t good enough. “At this point, Mexico tariffs will be imposed on Monday”, Pence went on to say.
That talks haven’t produced a sweeping agreement isn’t wholly surprising. After all, Mexico just learned about this a week ago, and it’s pretty hard to come up with a comprehensive plan to “dramatically reduce or eliminate the number of illegal aliens” coming into the United States in just six days. That goes double when you consider that what counts as “success” in that regard is left to the “sole discretion and judgment” of a man who isn’t even in the United States this week.
US stocks rallied again on Thursday helped along by a Bloomberg headline that suggested the US is thinking about delaying the tariffs to give Mexico more time to come up with a plan that will satisfy “Tariff Man”. It was the third day of sizable gains. The peso also rallied when the “news” crossed the wires, but eventually pared gains.
At this point, it should go without saying that trading on each and every tariff headline is a fool’s errand.
The peso is now beset with concerns (see red-shaded box in the bottom pane). Insult was added to injury this week by Moody’s and Fitch, who cut the country’s outlook to negative and cut its sovereign rating to BBB from BBB+, respectively, on Wednesday.
On Thursday evening, Pence went on to say that Mexico has been asked to “do significantly more”, although details are predictably sparse – probably because nobody is sure what Trump has in mind, if anything.
“[Our] position has not changed, and we are still moving forward with tariffs at this time”, Sarah Sanders insisted, again without elaborating on exactly what the White House’s “position” actually is, beyond being decisively pro-tariff.
Obviously, this is the very definition of absurd. Trump essentially broke the USMCA by threatening to sink one of the other two parties’ economies, hopped a plane to Europe and left it to Bob Lighthizer (who opposed the tariff idea) and Mike Pence to pick up the pieces.
You can be sure that everyone is largely in the dark when it comes to what Trump actually wants out of these negotiations. Indeed, it’s probably safe to assume that Trump himself isn’t sure what would constitute an acceptable proposal from Mexican Foreign Minister Marcelo Ebrard. Apparently, Mexico is prepared to send some 6,000 national guard troops to its own southern border with Guatemala in an effort to placate the US.
“I’m encouraged they came today with more but it will be a matter for the president to consider”, a deferential Pence concluded.