Tariff tensions finally shake USD after US-Colombia agreement 🖋️📌

The two hottest topics related to Donald Trump's presidency—migration and tariffs—merged this weekend, amid tensions between the U.S. and Colombia. Gustavo Petro, the President of Colombia, refused to accept U.S. military planes carrying migrants, stating that “the U.S. cannot treat Colombian immigrants like criminals.” In response, Donald Trump threatened to impose a 25% tariff on Colombian products and raise it to 50% within a week.

This decision stemmed from a prior agreement by Colombian authorities to transport migrants. The tariffs were to be enacted through a special law—the International Emergency Economic Powers Act, which allows the president to impose extraordinary fees and penalties on foreign countries in cases of exceptional economic circumstances. Notably, this law has never before been used to impose tariffs.

Ultimately, the United States and Colombia reached an agreement on deporting illegal immigrants. Colombia agreed to “unlimited acceptance” of all deportees, including those on U.S. military flights, which led the U.S. to hold off on implementing the 25% tariffs. The agreement helped avoid significant economic disruption for Colombia, whose largest trade partner is the U.S.

USDIDX Returns to Decline

Earlier in the day, the dollar recorded moderate gains, potentially supported by the possibility of the U.S. administration using tariffs for the first time. The USDIDX index rose as much as 0.25%, reaching 107.600 points. However, news emerged that the Colombian government had agreed to all of Trump’s demands regarding the deportation of illegal immigrants under the threat of 25% tariffs. This information may have served as a catalyst for erasing the dollar’s gains and triggering a return to declines.

Trump also demonstrated his ability to effectively use the threat of tariffs without actually implementing them. At the time of publication, the USDIDX index continued to decline, down 0.30% to 106.950 points. The dollar’s weakness may also be influenced by a sharp sell-off in U.S. stock market futures and increased interest in the Chinese market following recent achievements by the startup DeepSeek.

Source: xStation 5