Trump’s New Tariff Threat Roils Markets – The New York Times

Then Mr. Trump dashed investors’ hopes by promising late on Thursday to put a 5 percent tariff on all imports from Mexico unless its government did more to to stem the flow of migrants across the United States border.

The penalty, which Mr. Trump said will increase every month until it reaches 25 percent, could affect everything from produce to car parts. Some factory owners in the United States, who had already seen their supply chains upended by tariffs on imports from China, had been looking to Mexico as a manufacturing alternative.

[Read more about how the trade war is changing supply chains.]

The reaction on Friday was sweeping and indicative of Mexico’s role in the global supply chain. Japanese automakers, many of whom make their goods in Mexico to be shipped elsewhere, took some of the biggest hits during the market drop on Friday.

Shares of Toyota fell 2.9 percent, while Nissan fell 5.3 percent and Honda fell 4.3 percent; the STOXX Europe 600 automobiles and parts index was down nearly 3 percent. In the United States, shares of General Motors fell more than 4 percent and Ford dropped more than 2 percent.

Constellation Brands, the brewer of Corona and other Mexican beer brands, was down roughly 7 percent. JPMorgan Chase analysts estimate that more than 70 percent of its sales come from products imported from Mexico.

Despite the re-emergence of trade hostilities, some investors found it more troubling that Beijing is compiling a list of foreign companies that “do not follow market rules, violate the spirit of contracts, blockade and stop supplying Chinese companies for noncommercial reasons, and seriously damage the legitimate rights and interests of Chinese companies.”

Comments

Write a Reply or Comment:

Your email address will not be published.*