Trade War Panic Attack

Greg GuenthnerTrump is swinging his tariff hammer again this week — and every political problem he faces is starting to look like a nail.

In a surprise announcement, The Donald threatened a 5% tariff on all goods from Mexico unless the country curbs the influx of Central American migrants heading for the U.S. border.

According to the president, these tariffs will go into effect on June 10. But investors aren’t waiting to dump their favorite stocks. Futures tanked on the news while Asian and European stocks lurched lower in Friday trade. As of early this morning, the Dow is set to drop nearly 300 points at the open to close out a rocky trading month.

Here’s the tweet from last night that set off the whole debacle: 

trump

“In a separate statement, Trump blamed Mexico for not doing enough to stop illegal immigrants from Central America crossing into the U.S., saying ‘Mexico has not treated us fairly,’” MarketWatch reports. “Trump said the tariffs will rise to 10% on July 1 if the crisis persists, and by another 5% for every successive month, up to 25% by Oct. 1.”

Just how important is Mexican trade to the U.S. economy? For starters, U.S. imports from Mexico totaled almost $350 billion in 2018. Vehicles make up more than $90 billion of the total, so it’s not surprising that Trump’s announcement is already “pressuring shares in car makers with significant investments in supply chains that span the U.S.-Mexico border,” The Wall Street Journal reports.

“Mazda Motor Corp., which assembles passenger cars in Mexico for the U.S. market, was down as much as 7% in midmorning trading in Asia on Friday before rebounding from those lows,” The WSJ notes. “Honda Motor Co. was down 3.2%, Toyota Motor Corp. fell 2% and Nissan Motor Co. slid 3.6%.”

So far this month, escalating trade tensions have led to a slow selloff in stocks. Will Trump’s new tariff threats finally inspire some panic on Wall Street?

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