Stocks came well off session lows after President Donald Trump confirmed he agreed with Mexican President Claudia Sheinbaum on an immediate pause of anticipated tariffs for one month, spurring a quick rebound of the peso. Following a slide that approached 2% earlier Monday, the S&P 500 dropped 0.6%. Defensive groups led gains, while carmakers, semiconductor shares and industrial companies remained under pressure. The dollar almost wiped a rally that was earlier shaping up to be the biggest since the onset of the pandemic. The peso climbed 1.1%, while Canada’s loonie pared its decline to 0.4%.

“At this point, we are doubtful that the tariffs on Canada and Mexico will be long lasting, if enacted at all,” said Keith Lerner and Michael Skordeles at Truist Advisory Services. “Nevertheless, until there is clarity on the duration or magnitude of tariffs, these actions inject uncertainty into supply chains and pricing for many companies – large and small – across North America.”

President Trump’s move to invoke an emergency and impose tariffs on Canada, Mexico and China is the most extensive act of protectionism taken by a US president in almost a century. While both Canada and Mexico have pledged to retaliate if Trump follows through on his threats, President Sheinbaum posterd on social media that “we had a good conversation with Trump.” “I look forward to participating in those negotiations, with President Sheinbaum, as we attempt to achieve a ‘deal’ between our two Countries,” Trump said.