(Bloomberg) -- US President Donald Trump announced sweeping tariffs on Colombia before abruptly pulling the threat after reaching a deal on the return of deported migrants, a move that rattled global markets in the space of several hours.
The White House claimed victory late on Sunday, saying Colombia had “agreed to all of President Trump’s terms” without delay, including the acceptance of deportees on US military aircraft. Colombian President Gustavo Petro had earlier refused to allow two military planes carrying deported migrants to land, objecting to the use of shackles and handcuffs on detainees.
Colombian Foreign Affairs Minister Luis Gilberto Murillo said in a video that both countries overcame the diplomatic “impasse,” adding that the president’s airplane will be ready to take the Colombians who were set to be deported back to the country.
“We will continue receiving the Colombians who return as deportees, guaranteeing them conditions of dignity,” Murillo said.
Colombian ambassador to the US Daniel Garcia Pena told a local radio station that he was able to confirm that no military personnel would be on the deportation flights, only personnel from US immigration. He added that military planes would only be used as a last resort.
Trump’s move to quickly threaten tariffs on billions of dollars in trade in oil, cut flowers, coffee and more served as a stark reminder of his eagerness to use economic tools to achieve geopolitical goals.
That uncertainty left a cloud hanging over global markets even after the decision was reversed. The weekend announcement made it clear that tariffs will be the first weapon Trump turns to for policy disagreements, while the rapid resolution will do little to quell investor nerves over their usage.
The Mexican peso and South African rand led losses among emerging-market currencies as the dollar strengthened versus most of its major peers. The greenback had endured its worst week in more than a year last week as Trump refrained from immediately imposing tariffs on China and other major trading partners — moves that would favor a stronger US currency.
Earlier in the day, Trump ordered his administration to impose tariffs and sanctions on Colombia for refusing to allow the military planes to land. In a social media post, Trump said he would put an emergency 25% tariff on all Colombian goods coming into the US, which would be raised to 50% in a week, as well as travel curbs and unspecified sanctions.
Secretary of State Marco Rubio then ordered a suspension of visa issuance at the US Embassy in Bogota and authorized other travel restrictions on those responsible for interfering with the flights. Those travel curbs, as well as enhanced inspections by customs officials, would remain in effect until the first planeload of Colombian deportees is successfully returned, White House Press Secretary Karoline Leavitt said in a statement Sunday night.
“Today’s events make clear to the world that America is respected again,” she said, adding that the order of tariffs and sanctions would remain unsigned “unless Colombia fails to honor this agreement.”
Trump’s action upended decades of warm relations between the US and Colombia. Ties between Trump and Petro had been widely expected to be strained due to their divergent political views, though the deterioration was swifter and more damaging than almost anyone anticipated.
Colombia is seeking to improve ties, with Murillo saying he plans to travel to Washington alongside Colombian ambassador to the US in the coming days to follow up on the agreements between both countries.
Still, Trump’s move sends a powerful message to the world, that not even old political allies are safe if they do not cooperate with him.
That is particularly the case when it comes to deporting undocumented migrants, a key election pledge from Trump. The White House has said that it has arrested 538 undocumented migrants and had begun using military aircraft to remove them within the administration’s first 100 hours.
Latin American officials, including Petro, have said they were dismayed by the treatment of the migrants even as they express a willingness to take them back. The US and El Salvador are working on an asylum agreement that would allow US officials to deport non-Salvadoran migrants to the Central American nation.
In comparison with some of the other countries Trump has targeted with his tariff threats, the fight with Colombia has relatively low economic consequences. Trade in goods between the US and Colombia was worth $33.5 billion in the first 11 months of 2024, according to US trade data. The US had a billion-dollar trade surplus with Colombia in that time.
Between January and November 2024, Colombian exports to the US reached $13 billion, a near 8% increase compared with the same period in 2023 and about a third of the nation’s total overseas sales. Colombia is the US’s fourth-biggest source of overseas oil, topping Brazil, according to the Energy Information Administration. Other major exports include gold, coffee and flowers — a good that typically sees brisk trade around Valentine’s Day.
The stakes would be much higher if Trump uses the same tactics with Mexico, which does almost twice as much trade with the US in a month as Colombia does in a year. Trump has said he’s considering similar tariffs on Mexican goods over its compliance with his border policies as soon as Saturday.
In financial markets, the dollar tends to rise against the target country’s currency if US tariffs look more likely.
“The FX market is still operating off a potential Feb. 1 deadline for tariffs against Mexico, Canada and China,” Chris Turner, head of foreign-exchange strategy at ING, wrote in a research note. “That may prevent the dollar from correcting too much further this week.”
Colombia has historically been one of Washington’s biggest diplomatic allies in Latin America and a major recipient of US aid and military assistance. Yet as one of the region’s leading leftist leaders, Petro was already on the wrong side of Trump. The Colombian leader has courted China and slammed Israel over the death toll among Palestinians in its war with Hamas.
“Petro’s response to Trump was foolish and it was a fight he won’t win,” Sergio Guzmán, an analyst at Colombia Risk Analysis, said before the two sides reached an agreement. “Social media posts have consequences, and it will be a difficult moment for Colombia as it will have real repercussions on us.”
--With assistance from Oscar Medina, Justin Sink and Andrea Jaramillo.
(Adds comment from Colombian ambassador to the US in 5th paragraph.)
