By Rodrigo Campos and Marc Jones
NEW YORK/LONDON (Reuters) -The Mexican peso rallied out of a selloff on Monday after 25% U.S. tariffs on Mexican products, expected to be imposed Tuesday, were delayed by a month.
“Our teams will start working today in two areas: security and commerce,” Mexican President Claudia Sheinbaum wrote in a social media post that announced the pause in tariffs and collaboration at the U.S.-Mexico border.
The peso had tumbled over 2% in a volatile session that saw it fall to near 3-year lows to the dollar at 21.2882, but was last trading at 20.43, up more than 1% on the day.
Wall Street analysts had said a full 25% tariff on Mexican imports to the U.S. would sharply weaken the peso and likely tip the economy into recession.
“It looks like a very positive outcome for Mexico,” said Graham Stock, senior sovereign strategist for emerging markets at RBC Global Asset Management, adding the outcome shows that there is an opportunity to negotiate.
“We’re going to be back here in a month’s time, so it is a temporary reprieve, but certainly a better outcome for Mexico than just plowing on into 25% tariffs as of tomorrow.”
The expected tariffs had been seen as the first salvo in a new trade war. Sheinbaum had ordered retaliatory tariffs, as did Canada which was also hit with levies, with Prime Minister Justin Trudeau warning Americans that tariffs would have real consequences for them. U.S. President Donald Trump and Trudeau are expected to speak later on Monday.
The Canadian dollar initially sank to a 22-year low of C$1.4793 per U.S. dollar and was last down 0.5% at C$1.4595.
(Reporting by Rodrigo Campos in New York and Marc Jones in London; Additional reporting by Ankur Banerjee; Editing by Sandra Maler, Christopher Cushing, Toby Chopra and Alison Williams)
