President Donald Trump withdrew his threat of imposing 50% tariffs on Colombian imports after reaching an agreement with Colombia on accepting deportees, marking a swift resolution to a diplomatic standoff that had rattled commodity markets.
What Happened: According to a White House statement released Sunday, Colombia agreed to “unrestricted acceptance” of deportees, including transport via U.S. military aircraft. The administration will hold the drafted tariffs “in reserve,” while maintaining visa sanctions and enhanced customs inspections until the first successful deportation flight.
The resolution comes after Colombia’s President Gustavo Petro initially blocked two U.S. repatriation flights, demanding protocols for dignified migrant treatment. Trump had responded by threatening escalating tariffs starting at 25% and rising to 50% within a week.
Market analysts had warned of inflationary pressures from the proposed tariffs. Goldman Sachs analyst Manuel Abecasis cautioned that while direct price impacts might be modest, consumer inflation expectations could spike significantly. The bank’s analysis suggests a 10% universal tariff could potentially increase headline inflation by up to one percentage point in extreme scenarios.
Why It Matters: Rep. Alexandria Ocasio-Cortez (D-N.Y.) had criticized the tariff threat, particularly its potential impact on coffee prices. “Trump is all about making inflation WORSE for working class Americans,” she posted on X, emphasizing that U.S. consumers ultimately bear tariff costs.
The agreement comes as markets closely monitor inflation indicators. The University of Michigan’s consumer survey shows five-year inflation expectations at 3.3%, the highest since 2008. Mohamed El-Erian, the chief economic advisor at Allianz, recently highlighted partisan divides in inflation expectations. Democrats project 4% while Republicans anticipate just 0.1%.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
