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LONDON (Reuters) – European officials said on Tuesday the prospect of Britain leaving the European Union without a deal in 10 days time was growing as British Prime Minister Theresa May summoned ministers to try to find a Brexit breakthrough.

May’s proposed withdrawal agreement has been defeated three times by the lower house of the British parliament, which failed on Monday to find a majority of its own for any alternatives.

She is expected to try to put her deal to a fourth vote this week.

The deadlock has already delayed Brexit for at least two weeks beyond the planned departure date to 2200 GMT on April 12.

“Over the last days a no-deal scenario has become more likely, but we can still hope to avoid it,” EU chief Brexit negotiator Michel Barnier said in Brussels.

May chaired several hours of cabinet meetings in Downing Street in a bid to find a way out of the crisis.

But nearly three years since the United Kingdom voted to leave the EU in a shock referendum result, it is still unclear how, when or if it will ever leave the club it first joined in 1973.

Barnier said May’s deal was the only way to ensure an orderly EU exit for the world’s fifth largest economy. If the deal was rejected, he said, then London would have to choose between a no-deal Brexit and a long delay.

European Central Bank policymaker Francois Villeroy de Galhau warned that markets needed to price in the growing risk of a no-deal.

The cacophony of warnings over a disorderly Brexit ratchet up the pressure on British lawmakers ahead of a possible fourth vote on May’s deal and as some try to grab control of parliament to prevent a no-deal.

If May cannot get her deal ratified by parliament then she has a choice between leaving without a deal, trying to trigger an election, or asking the EU for a long delay to negotiate a Brexit agreement with a much closer relationship with the bloc.

May is under pressure from at least half of her Conservative Party to leave the EU without a deal, though some lawmakers and ministers are also telling her that she must keep the United Kingdom firmly within the bloc’s economic orbit.

May will set out next steps ahead of an emergency EU summit on April 10, her spokesman said. May is opposed to another referendum, he said.

“I hope that we can still find a solution. The British parliament has said itself that it doesn’t want a disorderly Brexit,” German Chancellor Angela Merkel said.

The defeat of May’s deal after pledging to quit if it was passed has left the weakest British leader in a generation facing a spiralling crisis.

The British electorate, its two major parties and May’s cabinet are all divided over Brexit and May risks ripping her Conservative Party apart if she tilts towards a closer post-Brexit relationship with the EU or leaving without a deal.

BREXIT CHAOS?
Investors and diplomats are in despair at the chaos and such is the volatility of Brexit news from London that some traders have stepped away from sterling – which has seesawed on Brexit news since the 2016 referendum.

“There is professional bewilderment that the motherland of common sense is in this place,” one European diplomat said.

Sterling, which has fallen from $1.50 on the day of the June 23 2016 referendum, fell towards $1.30 and some investors sought the safe haven of German and British bonds as the EU braced for the potential chaos of a no-deal.

The EU warned that a no-deal would disrupt financial markets and have an impact on liquidity.

“Markets were betting as recently as yesterday that there would be a deal and they are going to need to price in the growing risk of a no deal, including on the value of the pound,” the ECB’s Villeroy told French radio station BFM Business.

Villeroy, who is also head of the French central bank, said the ECB stood ready to lend euros to British banks if necessary, and that the Bank of England was prepared to lend sterling.

The World Trade Organisation said a hard Brexit could push 2019 global trade growth to the bottom end of the WTO’s forecast range of 1.3 to 4.0 percent.

Britain’s top civil servant, Mark Sedwill, said a no-deal Brexit would push up food prices by 10 percent, force direct British rule in Northern Ireland and compromise national security, the Daily Mail reported.

No-deal means there would be no transition so the exit would be abrupt. Britain is a member of the WTO so tariffs and other terms governing its trade with the EU would be set under WTO rules.

FOURTH TIME LUCKY?
With Brexit stalled, parliament has been trying to come up with an alternative but has thus far failed.

The option which came closest to getting a majority in parliament on Monday was a proposal to keep Britain in a customs union with the EU, which was defeated by three votes. A proposal to hold a confirmatory referendum on any deal got the most votes, but was defeated by 292-280.

Some lawmakers published draft legislation on Tuesday that would require May to seek a delay to Brexit beyond April 12 to prevent the United Kingdom leaving without agreement.

“This is a last-ditch attempt to prevent our country being exposed to the risks inherent in a no-deal exit,” Conservative lawmaker Oliver Letwin said.

But May is boxed in by different factions: half of her lawmakers voted for a no-deal Brexit last week while just 37 voted for the customs union option on Monday and 15 for a confirmatory referendum.

That means May’s deal is back in focus, though she must find a way to get around a ban on repeatedly bringing the same matter to a vote in parliament.

May would rather go for a no-deal Brexit than halt the leaving process altogether, she will tell senior ministers on Tuesday, a reporter for the Financial Times said.

LONDON (Reuters) – World stocks hovered just under a six-month high on Tuesday as Brent neared $70 a barrel for the first time since November, Brexit fatigue sapped sterling and the dollar shows signs of gaining strength again.

Some brightening of the global industrial mood – at least in China and the United States – was competing for attention with another dour U.S. retail sales report, Britain’s broken Brexit plans and more central bank caution, this time from Australia.

Most European bourses posted slight gains early on helped by Britain’s exporter-heavy FTSE 100, which climbed as much as 0.5 percent as exporters cheered the fourth fall in sterling in the last five days.

That was because Britain was no nearer to resolving the chaos surrounding its exit from the EU bloc after parliament failed on Monday to find a majority of its own for any alternative to Prime Minister Theresa May’s divorce deal.

May is due to hold hours of cabinet meetings with senior ministers on Tuesday to plan the government’s next moves.

It meant investors stuck with UK Gilts and safe-haven German bonds, negative yields notwithstanding, in the bond markets despite a pop back higher in key U.S. yields in recent days.

“It does seem that British MPs want to avoid a no-deal Brexit by all means, but they are not voting for any of the alternatives and time is running out,” DZ Bank strategist Daniel Lenz said.

“So I think investors have to prepare for the possibility that no-deal Brexit is on its way in 10 days’ time; it’s a little bit affecting yields this morning.”

MSCI’s broadest index of Asia-Pacific shares outside Japan ended up 0.2 percent and at a seven-month high after also rallying more than one percent in the previous session and a jump from Wall Street overnight.

Chinese bluechips scored a 10-month high having also leapfrogged Colombia to the top of the leaderboard of world share markets, while Australian shares gained 0.4 after the Aussie dollar had dropped following a meeting of the country’s central bank.

The RBA held interest rates steady and again highlighted the strength of employment, showing no immediate inclination to echo the outright dovish tone of some of its global peers.

Nevertheless it highlighted “downside risks for the global growth environment” and with national elections coming markets were betting the RBA will ultimately be forced to ease its rates, if only to stop the Aussie dollar from rising.

OIL ON THE BOIL
The other big shift taking place was in oil markets where prices hit fresh 2019 highs after a U.S. official had said Washington was considering more sanctions on Iran and a key Venezuelan export terminal halted operations.

U.S. crude futures traded at $61.82 per barrel, up 0.4 percent on the day while Brent futures were eyeing $70 a barrel for the first time since November at $69.19.

“China’s PMI number was the most significant monthly increase since 2012, which should ease concerns around a potential threat to oil demand,” said Stephen Innes, head of trading and market strategy at SPI Asset Management.

Copper and gold both ticked down in the industrial and precious metals markets but in the digital world, Bitcoin suddenly came back to life.

It jumped 20 percent to touch $5,000, its highest since November. Crypto-analysts pointed to a large order in a thin market, though there wasn’t any obvious trigger for than order immediately apparent.

The upward swing did though see Bitcoin break through its 200-day moving average for the first time in more than a year. The value of the unit plunged last year as authorities globally tightened their regulation on the market.

In emerging markets, gains in MSCI’s EM share index were capped at 0.16 percent, after losses in countries such as Turkey and South Africa that were under pressure from political tension and weak local manufacturing.

The lira gave up 1.6 percent after the United States halted delivery of equipment related to the F-35 fighter aircraft to Turkey.

The disagreement is the latest of a series of diplomatic disputes between the United States and Turkey, which were partly responsible for pushing the currency into a crisis last year.

Also playing into the lira’s recent volatility have been heavy-handed clampdown on the international lira market. Local elections at the weekend saw President Tayyip Erdogan’s AK Party lose Istanbul and Ankara.

LONDON (Reuters) – Britain was no nearer to resolving the chaos surrounding its departure from the European Union after parliament failed on Monday to find a majority of its own for any alternative to Prime Minister Theresa May’s divorce deal.

After a tumultuous week in which May’s divorce strategy was rejected by lawmakers for a third time, despite her offer to quit if it passed, the future direction of Brexit remains mired in confusion.

In a bid to break the impasse, lawmakers on Monday voted on four last-minute alternative Brexit options for what is the United Kingdom’s most far-reaching policy change since World War Two. All were defeated.

The option that came closest to getting a majority was a proposal to keep Britain in a customs union with the EU, which was defeated by three votes.

A proposal to hold a confirmatory referendum on any deal got the most votes, but was defeated by 292-280.

The government is firmly opposed to both of these: the first, because it would mean giving up the freedom to make independent trade deals that many of her eurosceptic lawmakers long for; the second, because May says it would betray the voters who were promised that the result of the 2016 referendum would be implemented, and potentially solve nothing.

Brexit minister Steven Barclay said after the results were announced that the default position was still that Britain would leave the EU on April 12 without a divorce deal – the nightmare scenario for many international businesses.

FOURTH TIME LUCKY?
“The only option is to find a way through which allows the UK to leave with a deal,” told parliament.

He hinted that May could put her deal to a fourth vote this week in the hope of securing an orderly exit before European elections are held from May 23 onwards – an unpredictable complication that May’s government is determined to avoid.

“If the house were to agree a deal this week, it would still be possible to avoid holding European parliamentary elections,” Barclay said.

May is due to hold five hours of cabinet meetings with senior ministers on Tuesday to plan the government’s next moves.

Sterling fell almost 1 percent to $1.3048 after the vote results were read out by the speaker, John Bercow, to stand around 0.5 percent lower on the day. [GBP/]

The third defeat of May’s withdrawal agreement on Friday – the date Britain was originally scheduled to leave the EU – has left one of the weakest British leaders in a generation facing a spiralling crisis.

Her government and her Conservative Party, which has been trying to contain a schism over Europe for 30 years, are now riven between those who are demanding that May engineer a decisive break with the bloc and those demanding that she rule out such an outcome.

If May were to throw her weight behind either camp, she would risk tearing her party apart and bringing down the government.

RIDDLE OF THE SPHINX
Some Conservative lawmakers have warned they will support a motion of no confidence if she accepts calls for a Brexit that maintains many of the existing close economic ties with the EU.

From EU officials watching from Brussels, there was one plea – make up your minds.

“A sphinx is an open book compared to the UK,” said Jean-Claude Juncker, European Commission president. “Nobody knows where it is heading. Would like to make the sphinx talk and tell us in which direction they would like to go.”

But while government and parliament struggle to solve the riddle, business is already suffering.

Two of Britain’s biggest carmakers, BMW and Peugeot, both said that, despite the delay to Brexit, they would go ahead next week with factory shutdowns that had been deliberately scheduled to minimise disruption to their cross-border supply lines in the event of a no-deal departure on March 29.

The political deadlock in London forced May to ask for a delay but as things stand, Britain will now depart at 2200 GMT on April 12 – unless May can present another viable option to EU leaders holding an emergency Brexit summit on April 10.

Hardline Conservative eurosceptic Mark Francois told Reuters: “What took place in the House of Commons this evening was an attempted coup against the British people and the coup has failed … I think ‘no deal’ is now highly likely.”

WASHINGTON (Reuters) – U.S. President Donald Trump said on Monday he was willing to wait until after the 2020 presidential election to get Congress to vote on a new healthcare plan, giving Republicans time to develop a proposal to replace Obamacare.

Congressional Republicans have been unable thus far to draft a proposal to replace Democratic President Barack Obama’s signature Affordable Care Act despite frequent vows to do so in recent years.

Trump’s vow last week that the Republican Party will be “the party of healthcare” caught his fellow Republicans off guard after the Justice Department backed a lawsuit intended to wipe out Obamacare, which has helped millions of Americans get health insurance.

In a series of tweets on Monday night, Trump said Republicans are developing “a really great HealthCare Plan with far lower premiums (cost) & deductibles than Obamacare.”

“In other words it will be far less expensive & much more usable than ObamaCare. Vote will be taken right after the Election when Republicans hold the Senate & win back the House,” he said.

Trump’s move suggests he is willing to debate the future of the U.S. healthcare system during the 2020 presidential election campaign than try to reach agreement on a plan sooner.

LONDON (Reuters) – Parliament will again try to take control of Britain’s departure from the European Union on Monday, with some lawmakers hoping to force Prime Minister Theresa May to drop her Brexit strategy and pursue close economic ties with the bloc.

May’s deal, which has been defeated by lawmakers three times even after she promised to step down if it passed, was further dented when her own parliamentary enforcer said a softer Brexit was inevitable.

Three days after the date on which Britain was originally due to leave the EU, it was still uncertain how, when or even if the United Kingdom would ever say goodbye to the bloc it first joined 46 years ago.

The third defeat of May’s divorce deal left one of the weakest leaders in a generation grappling with a perilous crisis over Brexit, the United Kingdom’s most significant move since World War Two.

Underlining how uncertainty is hurting business, the UK head of German industrial giant Siemens, Juergen Maier, said Britain was wrecking its reputation for stability and he urged lawmakers to back a customs union with the EU.

Parliament will vote on different Brexit options on Monday, possibly showing a majority backing for a customs union, and then May could try one last roll of the dice by bringing her deal back to a vote in parliament as soon as Wednesday.

May’s government and her party, which has grappled with schism over Europe for 30 years, was in open conflict between those pushing for a customs union with the EU and eurosceptics who are demanding a cleaner break with the bloc.

May’s enforcer in parliament – known as the chief whip – said the government should have been clearer that May’s loss of her majority in parliament in a snap 2017 election would “inevitably” lead it to accept a softer Brexit.

“The government as a whole probably should have just been clearer on the consequences of that,” Julian Smith told the BBC in an interview published on Monday.

“The parliamentary arithmetic would mean that this would be inevitably a kind of softer type of Brexit,” said Smith, who also said ministers had tried to undermine the prime minister.

Their behaviour, he said, was the “worst example of ill-discipline in cabinet in British political history”.

Asked about his comments, May’s spokesman said: “The PM made it clear that there was a need to bring the country back together after the Brexit vote and that is what they (the government) are working to achieve.”

On the lack of discipline in government, he said Brexit brought “out strong emotions” on all sides of the debate.

Asked about the possibility of a snap election to break the deadlock in parliament, May’s spokesman said the prime minister has said an election would not be in the national interest.

BREXIT IN MELTDOWN
In a 2016 referendum, 17.4 million voters, or 51.9 percent, backed leaving the EU while 16.1 million, or 48.1 percent, backed staying. But ever since, opponents of Brexit have sought to soften, or even stop, the divorce.

The Times newspaper said May had been warned by some senior ministers that she faced resignations if she agreed to pursue a softer Brexit.

Britain had been due to leave the EU on March 29 but the political deadlock in London forced May to ask the bloc for a delay. Currently, Brexit is due to take place at 2200 GMT on April 12 unless May comes up with another option.

The Brexit crisis has left the United Kingdom divided: supporters of both Brexit and EU membership marched through London last week. Many on both sides feel betrayed by a political elite that has failed to show leadership.

Business is also increasingly frustrated. “Enough is enough. We are all running out of patience. Make a decision and unite around a customs union compromise that delivers economic security and stability,” Siemens’ Maier said.

“Where the UK used to be beacon for stability, we are now becoming a laughing stock,” he said in open letter to lawmakers published by website Politico.

Parliament is due to vote at around 1900 GMT on Monday on a range of alternative Brexit options selected by Speaker John Bercow from nine proposals put forward by lawmakers, including a no-deal exit, preventing a no-deal exit, a customs union, or a second referendum.

“There are no ideal choices available and there are very good arguments against any possible outcome at the moment but we are going to have to do something,” said Justice Secretary David Gauke, who voted in the 2016 referendum to stay in the EU.

“The prime minister is reflecting on what the options are, and is considering what may happen but I don’t think any decisions have been made,” he told BBC TV. “We are clearly going to have to consider very carefully the will of parliament.”

BEIJING (Reuters) – Developed Western nations have long-term economic, technological and military advantages over China and the Communist Party has to realize that some people will use the West’s strong points to criticize socialism’s failings, President Xi Jinping said.

Since assuming power in China more than six years ago, Xi has ramped up efforts to ensure total party loyalty and discipline, including a sweeping crackdown on corruption, warning the party’s very survival is at stake.

This year, which is marked by a series of sensitive anniversaries including three decades since the bloody crackdown on pro-democracy demonstrators in and around Tiananmen Square, has seen a further increase in calls for party loyalty.

On Monday, leading party theoretical journal Qiushi, which means “Seeking Truth”, published lengthy excerpts for the first time from a speech Xi gave in early 2013 shortly after becoming party boss, warning of the dangers the party faces.

Citing Marx and Engels, Xi said socialism would inevitably vanquish capitalism, but that it would be a long historical process. China practises what it calls socialism with Chinese characteristics.

China must “fully appraise the objective reality of the long-term advantage Western developed countries have in the economic, scientific, and military fields, and conscientiously prepare for all aspects of long-term cooperation and struggle between the two social systems”, Xi said.

The party also needed to “face the reality that some people compare the good qualities of Western developed nations with the insufficiencies of our country’s socialist development and offer criticism of it”, he added.

While the party has committed “big mistakes” like the Cultural Revolution, when children turned on parents and students on teachers after Mao Zedong declared class war, the party’s history is “generally speaking glorious”, Xi said.

Those who criticize the revolution – which brought the Communist Party to power in 1949 – are simply trying to incite the overthrow of the party, he added.

But China needs to stick to its landmark economic reforms begun in 1978, without which the party could have fallen, Xi said.

The party “may even have faced a serious crisis, like the death of the party and the death of the country encountered by the Soviet Union and Eastern European countries”.

But China had proved the naysayers wrong, Xi added.

“Both history and reality tell us that only socialism can save China. Only socialism with Chinese characteristics can develop China. This is the conclusion of history and the choice of the people.”

ANKARA (Reuters) – Turkey’s Tayyip Erdogan suffered a severe setback as his ruling AK Party lost control of the capital Ankara for the first time in a local election and he appeared to concede defeat in the country’s largest city, Istanbul.

Erdogan, who has dominated Turkish politics since coming to power 16 years ago and ruled his country with an ever tighter grip, campaigned relentlessly for two months ahead of Sunday’s vote, which he described as a “matter of survival” for Turkey.

But the president’s daily rallies and overwhelmingly supportive media coverage failed to win over the country’s capital or secure a definitive result in Istanbul, as Turkey’s tip toward economic recession weighed heavily on voters.

Turkish broadcasters said opposition Republican People’s Party (CHP) candidate Mansur Yavas had won a clear victory in Ankara, but the vote count in Istanbul was so tight that both parties declared the narrowest of victories.

“The people have voted in favor of democracy, they have chosen democracy,” opposition leader Kemal Kilicdaroglu said, declaring that his secularist CHP had taken Ankara and Istanbul from the AK Party (AKP) and held its Aegean coastal stronghold of Izmir, Turkey’s third largest city,

Defeat for Erdogan’s Islamist-rooted party in Ankara was a significant blow for the president. Losing Istanbul, where he launched his political career and served as mayor in the 1990s, would be an even greater symbolic shock and a broader sign of dwindling support.

The Turkish lira, which swung wildly tmsnrt.rs/2CEaO11 in the week ahead of the elections echoing last year’s currency crisis, slipped again on Monday and was down 1.2 percent at 5.62 against the dollar.

State-owned Anadolu Agency said the AKP would appeal in some districts of the capital.

In Istanbul, the AKP said former Prime Minister Binali Yildirim defeated his CHP rival Ekrem Imamoglu by a mere 4,000 votes – with both candidates polling more than 4 million votes. Imamoglu said he had a lead of 28,000 with only 2,000 votes uncounted.

In a speech to supporters in Ankara, Erdogan appeared to accept AKP defeat in Istanbul, although he maintained that most neighborhoods in the city were held by his party. “Even if our people gave away the mayorship, they gave the districts to the AK Party,” he said.

The party would appeal results wherever needed, he added.

“TURNING A PAGE”
Erdogan pledged that Turkey would now focus on its troubled economy in the run-up to national elections in 2023. “We have a long period ahead where we will carry out economic reforms without compromising on the rules of the free-market economy,” he told reporters.

Turkey’s most prominent leader since the founder of the Turkish republic Mustafa Kemal Ataturk, Erdogan’s support has been based on strong economic growth and backing from a core constituency of pious, conservative Muslim Turks.

A consummate campaigner, he has been the country’s most popular – although divisive – modern politician, tightening his grip in elections last year that ushered in a powerful executive presidency, approved in a bitter 2017 referendum which alarmed Western allies who fear growing authoritarianism in Turkey.

But a currency crisis after last year’s election dragged the lira down by 30 percent and tipped the economy into recession in the fourth quarter. With inflation close to 20 percent and unemployment rising, some voters appeared ready to punish the president.

“Today’s elections are as historic as that of 1994,” prominent journalist Rusen Cakir tweeted, referring to the year Erdogan was elected mayor of Istanbul. “It is a declaration that a page that was opened 25 years ago is being turned.”

As authorities again scrambled to shore up the lira over the past week, Erdogan cast the country’s economic woes as resulting from attacks by the West, saying Turkey would overcome its troubles and adding he was “the boss” of the economy.

However Wolfango Piccoli, co-president of Teneo political risk advisers, said the AKP had lost seven of the country’s 12 main cities, even without taking Istanbul into account.

“It’s a bad night for the AK Party,” he said. “They have done very poorly in all the economic powerhouses of country. For a party which portrays itself as pro-business, it’s a huge issue.”

Moody’s rating agency warned the central bank’s use of reserves last week to prop up the lira raises new questions over its independence, while uncertainty over Turkey’s policy response to recession raises the risk of further capital flight.

In mainly Kurdish southeast Turkey, residents celebrated as the pro-Kurdish opposition Peoples Democratic Party (HDP) won back municipalities that authorities had taken over two years ago, accusing the HDP of terrorist links. The HDP denies links to the outlawed militant Kurdistan Workers’ Party.

“They robbed us of our will and we overturned this,” Diyarbakir resident Abdullah Elmas said.

MEXICO CITY (Reuters) – Donald Trump’s threat to shut the U.S. border if Mexico does not halt all illegal immigration has exposed the limitations of the new Mexican government’s strategy of trying to appease the U.S. president as he gears up for re-election.

Amid a surge in migrant detentions at the southwest U.S. border, Trump on Friday said he would close the 2,000-mile (3,200-km) frontier, or sections of it, during the coming week if Mexico did not halt the flow of people.

Casting the government under leftist President Andres Manuel Lopez Obrador as the villain in his struggle to curb illegal immigration to the United States, Trump returned to a signature theme of his 2015-2016 presidential election bid.

His words were a slap in the face to Lopez Obrador, who has refused to answer back to provocative comments from Trump. Instead, the Mexican leader has worked to cement his powerbase by combating poverty with welfare handouts and lambasting his predecessors as corrupt.

On Friday, Lopez Obrador again said he would not quarrel with Trump, invoking “love and peace” and repeating his commitment to curbing migration.

However, for former Mexican foreign minister Jorge Castaneda, Mexico faces “incredibly damaging” consequences if Trump does order “go-slows” at the border, which would pitch Lopez Obrador into uncomfortable new territory.

“He’s totally unfamiliar with international affairs. He’d prefer not to have to worry about these things,” Castaneda said, noting that the U.S. president had tested many governments. “Nobody’s been able to find a way to manage Trump. It’s a mess.”

Staunchly non-interventionist in international affairs, Lopez Obrador shows little interest in diplomacy. He has often said “the best foreign policy is domestic policy.”

But as the destination of 80 percent of Mexico’s exports and workplace of hundreds of thousands of Mexicans, the United States offers Trump plenty of leverage to apply pressure via the border.

Policy experts say Trump’s demand is not realistic and that Mexican authorities are already stretched.

Still, Mexico has signaled it will redouble efforts to contain migration, which stems largely from three poor, violent Central American countries: Guatemala, Honduras and El Salvador.

Foreign Minister Marcelo Ebrard said he did not believe Trump was demanding an outright stop to the migrant flow, which has run into the millions over the past decade.

“What can be done is to improve work on registering and regulating (migration),” Ebrard told Reuters. “They’re asking us to put into effect what we said we would do.”

The government has vowed to curb migration by addressing the root causes, keeping better tabs on the people entering Mexico and adopting a more humane approach to the phenomenon.

In exchange, Lopez Obrador has sought to enlist Trump’s aid in tackling the problems of Central America, which critics say has been scarred by a history of messy U.S. interventions.

On Thursday, Lopez Obrador said migration was chiefly a matter for Washington and the troubled region, reflecting the view that Mexico cannot help being sandwiched between the struggling countries and the richest nation on the planet.

Instead, the U.S. State Department said on Saturday it was cutting off aid to El Salvador, Guatemala, and Honduras, raising questions about Trump’s commitment to helping there.

Soaring border arrests have rankled with the U.S. president.

U.S. Customs and Border Patrol projections are for over 90,000 apprehensions to be logged during March, according to data provided to the Mexican government. That is up more than 140 percent from March 2018, and a seven-fold jump from 2017.

At the same time, Lopez Obrador is sending fewer migrants back home. In December-February, the administration’s first three months, the number dropped 17 percent from a year earlier to 19,360, data from the National Migration Institute show.

The fall partly reflects the government’s decision to issue humanitarian visas to encourage Central Americans to stay in Mexico. The visas proved so popular that the government had to suspend them, officials say.

Meanwhile, Lopez Obrador’s savings drive to pay for his social programs has cut the budget of the National Migration Institute by more than a fifth this year.

‘LIFE AND DEATH’
The clash illustrates Lopez Obrador’s miscalculation in thinking he could contain Trump’s hostility toward Mexico with U.S. presidential elections in 2020, said Agustin Barrios Gomez, a member of the Mexican Council on Foreign Relations.

Tension was inevitable given that Trump’s tough stance on illegal immigration is “immediately antagonistic” to Lopez Obrador’s core constituency: poorer Mexicans who often seek to better their lot in the United States, he argued.

Yet by agreeing in December to accept Central American asylum seekers while their claims are processed in the United States, Lopez Obrador gave the impression he could be “pushed around” by Trump, said former foreign minister Castaneda, who backed Lopez Obrador’s closest rival in the last election.

To keep the border open, Mexican business leaders say they are leaning on U.S. partners to pressure Congress.

A shutdown would be “very negative for both countries,” said deputy Mexican economy minister Luz Maria de la Mora, who saw Trump’s comments as part of his election campaign.

“I think the U.S. administration and the advisers in the White House know it’s not a good idea,” she told Reuters.

But if push came to shove, Mexico would suffer most, said Castaneda.

“The Americans have a much greater capacity … to outlast the Mexicans,” he said. “For Mexicans it’s a life or death issue. For Americans it’s a pain in the ass, but that’s it.”

CHICAGO (Reuters) – Stephen Wang is counting the costs of President Donald Trump’s trade war. He had to put down 12 times more cash as a guarantee to U.S. customs that he would pay the bill for tariffs on the Chinese-made pumps, valves and motors he imports.

The cost of the guarantee – a U.S. customs bond – has shot up, an additional hit to importers already facing steep customs bills adding up to tens of billions of dollars for tariffs imposed by the Trump administration on incoming Chinese goods, as well as steel and aluminum imports.

Since coming into effect last year, the tariffs have pushed up manufacturing costs, upended decades-old global supply chains and inflated prices for consumers, resulting in lower sales and forcing companies to defer investments. This, in turn, has dimmed global growth outlook, roiling financial markets.

Other ripple effects are less obvious, among them the rising expense of U.S. customs bonds. But for small companies that can ill afford the added cost, the impact can be crippling.

Given the extra duties associated with Trump’s tariffs, importers have been forced to post bonds that are worth much more to guarantee they can cover the added cost of bringing Chinese imports, and foreign steel and aluminum, into the United States.

In some cases, customs bond requirements have increased 500-fold, according to Reuters interviews with a dozen importers, underwriters and customs brokers.

“Managing the cash flow has become tough,” said Wang. If the tariff war drags on, he warns, companies operating with thin profit margins and a weak capital base could go bust.

Wang is the chief executive of Hengli America, which procures supplies from China for customers such as CNH Industrial’s construction and farm equipment units.

After duties on its merchandise surged from zero to $6 million a year, U.S. Customs required Hengli to post a $600,000 bond. Its previous bond was $50,000.

Other importers reported similarly sharp increases.

Lisa Gelsomino, chief executive officer at underwriting firm Avalon Risk Management, said one client recently had to replace a $50,000 bond with one worth $26 million.

The rise in tariffs means that U.S. Customs and Border Protection (CBP) has issued thousands of importers with notices that their bonds are inadequate.

The CBP has issued about 3,500 insufficiency notices since January, it said. That compares to an average of 2,070 notices a year for the period between 2006 and 2017, according to data compiled by Roanoke Insurance Group.

If importers fail to post a new bond within a month of receiving an insufficiency notice, customs officials can hold the cargo and charge additional fees. The CBP has around 224,000 active bonds on file.

No importer can ship goods into the country without posting a customs bond. The bonds are set at 10 percent of the importer’s total estimated annual duties, fees and taxes.

The Trump administration’s 25 percent import tariff on $50 billion of Chinese imported goods, and another 10 percent on $200 billion of imports, has added up. The annual tariff bill on Chinese goods alone stands at $32.5 billion – requiring $3.25 billion in additional customs bonds.

Separately, Washington has levied a 25 percent duty on imports of steel and a 10 percent duty on those of aluminum.

“You are talking millions of dollars that is going out,” said David Meyer, head of customs brokerage and freight logistics company DJS International Services Inc.

“But you don’t have a million dollar tree that you are shaking in your backyard to make sure that you have got that money…it has definitely become a burden for importers.”

More than half of Meyer’s clients have seen at least a tenfold increase in their bond amounts.

SURGING BOND REQUIREMENTS
What is proving painful for some importers has been a bonanza for the firms that underwrite the bonds.

More costly bonds mean higher underwriting fees. They also mean higher collateral requirements. Since underwriters are on the hook if importers fail to pay duties, they want collateral that matches the value of the bond; underwriters usually require 1-1.5 percent of the bond amount to guarantee the bond.

At Roanoke Insurance Group, the workload has increased so much that staff are working on weekends to handle it, said Colleen Clarke, vice president at Roanoke.

In one example, she said, Roanoke required $9 million in collateral from a steel importer that was asked to post a $9 million bond after duties on its imports surged from zero to $90 million a year.

The steel importer also paid $90,000 in premium for the bond. The end result: the importer needed to come up with just over $99 million a year to continue to import $360 million of steel.

That is complicating finances for importers. The trade war has also driven up some raw material, freight and warehousing costs, raising the risks that some importers might default on payment obligations.

“Most of the importers are not used to paying these duties,” said Roanoke’s Clarke. “The risk is – do they have cash infusion from somewhere else to pay these duties?”

Amy Magnus, who heads the National Customs Brokers & Forwarders Association of America, whose members work with over 250,000 importers and exporters, said a client who used to import Canadian steel went bankrupt after his shipments were subjected to a 25 percent tariff. She declined to share more details.

EXPENSIVE LOANS, DELAYED PAYMENTS
Four customs brokers told Reuters that some of their small-size clients had stopped importing goods altogether.

Hengli’s Wang says his cash flow needs have risen fourfold since July, forcing him to delay payments to his Chinese suppliers. In addition to higher costs, he is losing customers – some have switched to cheaper non-Chinese goods suppliers.

Precision Components, whose customers include Fortune 500 companies, imports bearings from China. Since July 6, when U.S. tariffs on bearings imports rose 25 percent, the cost of each container it receives from China has risen by $15,000, said Dave Hull, the firm’s president. The company imports around 40 containers a year.

It has been borrowing on average $200,000 a month since last July to meet its working capital requirements, Hull said, up from around $50,000 prior to that.

What’s more, custom brokers, who sometimes pay duties on behalf of their clients, are demanding quicker repayment, said Jane Sorensen, president of the Chicago Customs Brokers & Forwarders Association.

They are asking importers to repay in 7-10 days, she said, compared with the more typical 30-day time frame.

Bill Sharpe, a customs broker in Chicago, says he has halved his collection time to 15 days. Even so, he worries about the risks of clients defaulting.

“We are having to keep a close eye on all our clients to make sure they don’t turn into a credit risk,” Sharpe said.