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Trump calls for Mexico to 'step up' as trade talks make some progress

Washington

US and Mexican negotiators were set to resume talks on Thursday with time running short to avert President Donald Trump's threat to impose tariffs next week.

"We've told Mexico the tariffs go on" if no deal is made, Mr Trump told reporters on Thursday while travelling to France to attend a ceremony to commemorate the 75th anniversary of D-Day. "They have to step up to the plate." Mr Trump said on Thursday that progress was made during a 90-minute meeting at the White House between Mexico's Foreign Minister, Marcelo Ebrard, and top American officials and that "something pretty dramatic could happen" in the coming days.

It's unclear how much progress on any deal can be made until Mr Trump returns to Washington from a week-long trip to Europe. Mr Trump continued to hold out the threat that the US will follow through with tariffs on Monday.

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"If no agreement is reached, tariffs at the 5 per cent level will begin on Monday, with monthly increases as per schedule," Mr Trump tweeted on Wednesday. "The higher the tariffs go, the higher the number of companies that will move back to the USA!" The peso fell more than 1 per cent against the dollar as the currency reeled from the US tariff threats and more pessimistic assessments from ratings companies. Moody's Investors Service on Wednesday cut Mexico's outlook to negative from stable, and then Fitch lowered the nation's sovereign rating to BBB from BBB+.

But Mr Ebrard, after the meeting, said he was optimistic the two sides could reach a deal.

"We are optimistic because we had a good meeting with respectful positions from both parts," Mr Ebrard said during a press conference at the Mexican Embassy in Washington. "We had an opportunity to explain our point of view." Mr Ebrard said they didn't discuss the tariffs during the meeting with the US delegation, which included Vice-President Mike Pence, Secretary of State Michael Pompeo and Acting Homeland Security Secretary Kevin McAleenan.

Mr Trump last month announced a 5 per cent tariff on all imports from Mexico unless the country takes "decisive measures" - as judged by his administration - to stem migrants entering the US. He said the tariffs would begin on June 10 and scale up incrementally until they reach 25 per cent on Oct 1. Mexico is the second largest source of US imports after China.

Mr Trump isn't only threatening Mexico trade with tariffs. He reiterated on Thursday that the US is prepared to place levies on another US$300 billion of imports from China if necessary and asserted that Beijing "wants to make a deal badly". "A lot of interesting things are happening," he added.

Mr Trump said earlier in the day he thought Mexico also wants to reach an agreement. "I think they want to make a deal and they sent their top people to try to do it," he said on Wednesday in Ireland.

Democratic Senator Chris Murphy of Connecticut called Mr Trump's deal-making skills "a con job" on Twitter on Thursday. "Trump says everybody wants to make a deal and we're way past the halfway point of his presidency and no one has made a deal," he wrote. "Not China. Not Iran. Not North Korea. And the one deal he did do, with Mexico and Canada, he's in the process of destroying." On Wednesday, Mr Ebrard highlighted some differences. While the US is looking for measures to take effect "immediately," Mexico wants to take steps that are longer term and "not just punitive". The White House has so far been vague about what Mr Trump, the self-avowed "Tariff Man," expects Mexico to do to avoid the duties. But White House trade adviser Peter Navarro offered what appeared to be an opening salvo in negotiations earlier on Wednesday, saying tariffs may not have to take effect if Mexico could meet three conditions, including keeping US asylum seekers in that country.

"The most important thing is for the Mexican government to take the asylum seekers," Mr Navarro said in an interview on Wednesday on Bloomberg TV in Washington.

The number of apprehensions and people denied entry along the US-Mexico border has been rising steadily. More than 144,000 people were apprehended after illegally crossing the southern border in May or were refused entry to the US, Customs and Border Protection announced on Wednesday.

The White House has said there's an emergency at the border and demanded that Mexico accept the asylum seekers, step up patrols of its own southern border and strengthen checkpoints along the route migrants travel.

The tariff threat also cast doubt on the future of Mr Trump's update of the North American Free Trade Agreement, a key accomplishment of his first term. The new trade pact, called the US-Canada-Mexico Agreement, was already at risk of stalling in Congress. The Trump administration wants it passed by summer. BLOOMBERG