Mexico Tariffs on the Way

President Trump said Thursday that the US would impose a 5% tariff on ALL Mexican goods starting next month, and would rise 5% a month up to 25% “until Mexico substantially stops the illegal inflow of aliens coming through its territory.”

Of course the world markets loved that tweet! The FTSE 100 (UK) is off .9%, DAX (Germany) is down 1.7%, Hang Seng (Hong Kong) closed down .79%, the Nikkei (Japan) closed down 1.63%, and the Shanghai Composite (China) only closed down .24%. It’s looking like a rough day ahead for the US markets, all down over 1% premarket.

Mexico is currently our 3rd largest goods trading partner. We import almost $300 billion worth of goods from Mexico.

Who’s Hurt the Most?

By all indications it’s automakers. GM GM 36.69 +0.04 +0.10% , Ford F 9.07 +0.04 +0.44%, Chrysler FCAU 13.20 -0.13 -0.98% are all down over 4% premarket.

Next up…

Avocados. Expect to pay more for your quac, the US imports 78% of Mexico’s avocado production. 71% of tomatoes sold in the US come from Mexico.

Alcohol prices are likely to rise, the US imported over $1.3 billion worth of beer and imports about 80% of Mexico’s total annual exports of tequila. Tito’s is going to be happy!

15% of all sugar consumed in the US comes from Mexico.

Here are 2016 numbers…

  • Vehicles  $74 Billion (Passenger cars, Vehicle parts)
  • Electrical Machinery  $63 Billion (Flat screen TVs , Electrical Generators, Monitors)
  • Machinery $49 Billion
  • Crude Oil  $14 Billion
  • Medical Instruments $12 Billion
  • Fresh Vegetables $4.8 Billion  (Avocados, Tomatoes)
  • Fresh Fruits $4.3 Billion
  • Alcoholic Beverages $2.7 Billion (Beer, Tequila)
  • Rubber $2.4 Billion
  • Snack Foods $1.7 Billion
  • Processed Fruits and Vegetables $1.4 Billion