President Donald Trump hit send on a Truth Social post at 1:28 p.m. ET Sunday that seemed to be the start of 25% tariffs on Colombia.
But it was all apparently over about 10 hours later, with White House press secretary Karoline Leavitt saying the South American nation “has agreed to all of President Trump’s terms.”
The abbreviated trade war holds several important lessons for how future conflicts might unfold ahead of a key Saturday deadline for tariffs on Canada, Mexico, and China.
Read more: What are tariffs, and how do they affect you?
It showed that Trump intends to use a strategy of threatening tariffs first and then asking policy questions later, with some of the core issues with Colombia apparently still to be hammered out.
It also confirmed that his administration aims to use a much-watched tariff authority from a 1977 law that grants the president the power to declare an economic emergency and act quickly to achieve its ends.
Lastly, the episode made clear that the president has free tariff reign.
Capitol Hill’s “Republican conference, despite mostly still declaring themselves as ‘free traders’ will not stand in the way of Trump imposing tariffs via executive order, without input from Congress,” said Henrietta Treyz of Veda Partners in a note about the standoff.
President Donald Trump boards Air Force One upon departure from Nevada on January 25. (MANDEL NGAN/AFP via Getty Images) · MANDEL NGAN via Getty Images
The takeaway for markets is perhaps that more uncertainty lies ahead.
“Until tariff policy is clarified, there is a downside risk in the near term,” RSM economist Joseph Brusuelas added in his own Monday morning note.
The issue underlying this weekend’s conflict was immigration, specifically the Trump administration’s efforts to begin deportations that include the loading of migrants onto military planes to send them out of the country.
Two such flights were headed to Colombia even after the country’s president early Sunday morning said that he would deny the flights if they didn’t include a protocol for dignified treatment.
He then followed through on that stand later that day, canceling the authorization for the flights and forcing the military planes to turn around.
Once Trump caught wind of the standoff, his response was immediate with an afternoon threat for “emergency 25% tariffs on all goods coming into the United States.”
President Donald Trump, alongside Press Secretary Karoline Leavitt (R), speaks with the press on Air Force One on January 25. (MANDEL NGAN/AFP via Getty Images) · MANDEL NGAN via Getty Images
Throughout the afternoon, Trump’s government and his allies then sprang into action to fulfill his threat. The State Department announced the suspension of visa issuances and the Department of Homeland Security got involved. There were also immediate threats of sanctions from Capitol Hill.
The Trump government also drafted a tariff plan that wasn’t implemented but will now be held “unless Colombia fails to honor this agreement,” according to Leavitt.
The Colombian Foreign Ministry confirmed that a deal had been reached but offered a slightly different version of events. It said transfers would resume under dignified conditions and that talks to hammer out additional details would commence in Washington in the coming days.
In her statement announcing a deal, Trump’s press secretary confirmed that the president’s tariff plans would have been implemented using authority granted in a 1977 law called the International Emergency Economic Powers Act (IEEPA).
This maneuver is seen as the most muscular and rapid route to new tariffs as it grants the president the power to declare an economic emergency and act quickly. It is not the route Trump took for tariffs in his first term and is potentially open to legal challenges.
“Based on this agreement, the fully drafted IEEPA tariffs and sanctions will be held in reserve,” Leavitt said in her statement Sunday night.
Colombia’s President Gustavo Petro at a United Nations’ biodiversity conference in 2024. (AP Photo/Fernando Vergara) · ASSOCIATED PRESS
The back-and-forth comes as a self-imposed deadline of Saturday looms where Trump has promised tariff action against America’s top three trading partners.
He has pledged 25% duties on goods from Canada and Mexico and 10% tariffs against China, citing the drug trade and illegal immigration as his reasons for doing so.
This weekend’s events appear to confirm the widespread expectation that IEEPA will likely be Trump’s approach in those higher-stakes tariff fights.
It also further confirmed an emerging three-pronged approach to tariffs that Trump has signaled and treasury secretary nominee Scott Bessent outlined in his recent confirmation hearing.
One prong, Bessent said, would be to use tariffs to remedy unfair trade practices. Another would look toward “a more generalized tariff as a revenue raiser for the federal budget.”
A third prong — where this weekend’s back and forth with Colombia seems to fit in — was around using tariffs to solve pretty much any other geopolitical issue. Trump has long said tariffs can be used widely and during the campaign it seemed at times that his answer to pretty much any question was more tariffs.
The overall picture, noted Capitol Economics in a Monday morning note, is that Trump’s first week in office “has poured some cold water on the idea, still lurking in some parts of the market, that the threat to impose tariffs was bluster.”
Ben Werschkul is Washington correspondent for Yahoo Finance.
Every Friday, Yahoo Finance’s Rachelle Akuffo, Rick Newman, and Ben Werschkul bring you a unique look at how US policy and government affects your bottom line on Capitol Gains. Watch or listen to Capitol Gains on Apple Podcasts, Spotify, or wherever you find your favorite podcasts.
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