Donald Trump has dangled the prospect of a “dramatic” U-turn on his threat to slap tariffs on Mexico from Monday but said Mexico still had to deliver much more on migration first as talks were set to resume in Washington.

Speaking ahead of his trip to Normandy, where the US president was travelling for the 75th anniversary of the D-Day landings, Mr Trump said he had made clear to Mexico that he was prepared to follow through on his threat to levy 5 per cent tariffs on Mexican exports from June 10, rising to 25 per cent by October. 

But he added: “We’re having a great talk with Mexico . . . something pretty dramatic could happen”. 

It was a marked change of tone from Wednesday night, when he tweeted that “not nearly enough” progress had been made. The president has faced backlash from some members of his own Republican party, who are weighing whether to take action to stop the tariffs if a deal is not reached.

Chuck Grassley, a Republican senator from Iowa, on Thursday implored Democrats to approve more money for border security in a series of tweets, saying he understood Mr Trump was “trying to do everything he can considering the limited $ he has for the border problem.” But, he added: “Tariffs not the answer.”

Richard Neal, the Democratic chairman of the House Ways & Means Committee, said that if the president moved ahead with a declaration of a national emergency and implemented the tariffs, “I will introduce a resolution of disapproval to stop his over-reach”.

A Trump administration official said negotiations with Mexico would resume in Washington on Thursday. A day earlier, US vice-president Mike Pence and secretary of state Mike Pompeo met with a Mexican delegation led by Marcelo Ebrard, the foreign minister.

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Mexico’s foreign minister, Marcelo Ebrard, said on Thursday that he believed the talks were “advancing,” according to Reuters, while Andrés Manuel López Obrador, Mexico’s president, said he was “optimistic” a deal to avert tariffs could be reached. He called on Mexicans to flock to a “friendship rally” in the border city of Tijuana on Saturday. 

Mr López Obrador declined to comment on possible reprisals if the tariffs go ahead but said “everything is being analysed”. Mexico is expected to impose steep tariffs on a range of US goods, as it did during a trucking dispute a decade ago and to counter US steel and aluminium tariffs last year, if the move goes ahead. 

But he drew the line at a comprehensive border crackdown on “our Central American brothers”, telling his daily morning news conference: “This is a profound humanitarian crisis. We cannot deal with that by closing borders.” 

As the US looks for an immediate solution to the migration problem, Mexico says it shares Washington’s concern over the increasingly fraught situation. The number of migrants encountered or apprehended at the US border leapt by 32 per cent in May from a month ago, according to US government data.

“We are in a full-blown emergency”, said John Sanders, acting commissioner of US Customs and Border Protection.

Mr López Obrador has denied acting on US orders, but Mexico has stepped up its deportations, reaching 15,654 in May, about three times the level in January. However, that is still only 11 per cent of total arrivals at the US border. 

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Mexico has already ruled out US demands for Mexico to become a so-called safe third country, in which asylum seekers would be forced to apply for safe haven in Mexico rather than in the US — an arrangement US has with its other Nafta ally, Canada. 

“It would be a concession to Trump with nothing in return,” said Gustavo Mohar, an expert on migration and former Mexican government official. 

Agustin Barrios Gómez at Comexi, a Mexican foreign relations think-tank, said he supported the idea. “I think it allows Mexico to be congruent with its values by offering refuge, while reducing dramatically the incentive to enter Mexico in the first place,” he said. 

Mexican and US business leaders have appealed for “more trade not tariffs” that would pile pressure on their economies. If tariffs go ahead, the peso currency, already under pressure, is expected to be hammered. 

Mr Trump’s move to set tariffs on Mexican imports, escalating over the coming months, has also triggered alarm bells about the US economic outlook, with some economists warning of a significant slowdown if no deal is reached.

More immediately, there are also fears of chaos at the border over the implementation of tariffs on Mexico, since many importers are not set up to pay levies on products they purchase from south of the border.

The Pacific Coast Council of Customs Brokers and Freight Forwarders Association, which is on the front lines of trade on the California-Mexico border, this week wrote a letter to Kevin McAleenan, the acting homeland security secretary, and Robert Lighthizer, the US trade representative, warning that they had “grave concern, even alarm” that it would be “impossible to comply” with the tariffs by June 10, or even July 1, when Mr Trump has said tariffs on Mexican imports would rise further to 10 per cent.

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“If the tariffs are applied on Monday, expect a mess,” John Murphy, senior vice-president at the US Chamber of Commerce, tweeted on Thursday, citing the letter.

“@USChamber got a bunch of voicemails overnight from companies angry about the threatened tariffs on goods from Mexico, which are scheduled to kick in on Monday. People we don’t know. This is big,” he added.

Via Financial Times