President Trump on Thursday walked back his previous threat to close the U.S.-Mexico border this week, telling reporters he is giving Mexico a "1-year warning" to stop illegal immigration and what he calls "massive" amounts of drugs entering the country through the southern border.

"If the drugs don't stop or largely stop, we're gonna put tariffs on Mexico and products, in particular cars. The whole ballgame is cars. If they don't do it, we're gonna tax the cars. And if that doesn't work, we're gonna close the borders."

The backdrop: As Axios' Jonathan Swan reported Thursday morning, Trump was hesitant to follow through on his border threat out of fear of doing anything to disrupt the markets. A source who has been talking to Trump about the border situation told Swan: "He’s very well aware that there’s a commercial trucking component that would be devastating on Mexico and would be hurtful to the United States."