WASHINGTON -- President Donald Trump said he would drop plans for tariffs on Mexico that he'd been threatening to impose for the past week after the country promised new steps to stem an influx of illegal migration into the U.S.
"I am pleased to inform you that The United States of America has reached a signed agreement with Mexico," Trump said in a tweet late Friday. "The Tariffs scheduled to be implemented by the U.S. on Monday, against Mexico, are hereby indefinitely suspended."
The deal preempts a planned 5 percent tariff on all Mexican imports to the U.S. that the president had said could increase to 25 percent by October.
Trump's May 30 announcement of the tariffs had triggered a new round of concern for the auto industry, already struggling to sustain profits amid slowing U.S. sales.
The move would have affected billions of dollars worth cars and light trucks bound for U.S. dealerships. In addition, the U.S. imported nearly $60 billion in auto parts from Mexico last year.
Deutsche Bank estimated that, if the penalty had risen to the full 25 percent, General Motors would taken a $6.3 billion hit before interest and taxes; Fiat Chrysler Automobiles' hit would have been $4.8 billion; and Ford Motor Co.'s would have been $3.3 billion.
Mexico-made vehicles account for about 15 percent of U.S. light-vehicle sales, or about 2.5 million vehicles annually, according to LMC Automotive.
Trump said Mexico will take unspecified steps to curtail migration. He said those details would be released "shortly" by the State Department.
The president's decision marked a dramatic turnaround after he persistently criticized Mexico for failing to prevent Central American migrants from traversing the country to get to the U.S. The decision marks a victory for Mexican President Andres Manuel Lopez Obrador, whose administration had been pressing Trump to drop the tariff threat.
The decision was welcomed by Republicans and others who warned the tariffs would damage the American economy, hurt job growth and delay or altogether scuttle a trade deal between the U.S., Canada and Mexico, which still needs lawmaker ratification. Mexico is the second-biggest source of U.S. imports.
"Mexico came through," said Sen. Chuck Grassley, R-Iowa, who opposed the tariffs, in a tweet soon after Trump's announcement.
Mexico's foreign minister, Marcelo Ebrard, who was in the Washington for the talks, said in a tweet that the tariffs wouldn't be imposed. "Thanks to everyone who has supported us by realizing the greatness of Mexico," he said in Spanish.
The tariff threat has rattled markets and prompted economists to forecast an increased risk of recession in the U.S., the world's largest economy, because trade between the U.S. and Mexico is so integrated. An all-out trade war would lower global gross domestic product by 0.8% or $800 billion by mid-2021, according to Bloomberg Economics.
Talks between the U.S. and Mexico intensified in recent days. The U.S. had demanded that Mexico begin detaining asylum-seekers, while beefing up security at both the Mexico-Guatemala border and at checkpoints through Mexico between its southern and northern borders.
The number of apprehensions and people denied entry along the U.S.-Mexico border has been rising steadily. More than 144,000 people were apprehended after illegally crossing the southern border in May or were refused entry to the U.S., Customs and Border Protection announced on Wednesday. That's the the most in a single month in at least five years; the number has grown every month since January.
Trump threatened the tariffs on May 30 -- the same day the administration sent a notice to Congress to try and kick-start passage of the trade deal that Trump negotiated to replace the North American Free Trade Agreement. Vice President Mike Pence also spent that day stumping for the deal's passage in Canada.