Stocks dive after Trump imposes tariffs on Mexican imports
President Trump’s expanded trade war is giving Wall Street — and avocado lovers — the shakes.
Traders rushed to sell stocks Friday after President Donald Trump threatened to levy escalating tariffs on Mexican imports by June 10, a trade tax that could increase costs for everything from cars, to avocados to beer.
The tariffs, which would start at 5 percent and increase monthly, could reach 25 percent by October if the Trump administration doesn’t feel Mexico has done enough to prevent the flow of migrants using the southern border to enter the US.
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Trump’s tariff threat sent the stock market — already battered this month by his China tariffs — tumbling further, with the Dow Jones industrial average plunging 354.84 points, or 1.4 percent, to close at 24,815.04.
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It was the blue chip index’s sixth consecutive week of ending in the red.
The S&P 500 and Nasdaq ended the day down 1.3 percent and 1.5 percent, respectively.
The threat of more tariffs are another thorn in the side of chief executive officers who were already fretting over how to adjust their supply chains in the wake of escalating tensions between the US and China.
One of the hardest hit industries will be Detroit automakers, who sold 2.5 million cars in the US last year that had been assembled in Mexico, according to data provided by Cox Automotive.
Fiat Chrysler Automobiles fell 5.8 percent, while shares of General Motors and Ford were off 4.3 percent and 2.2 percent, respectively.
Automakers, lured by cheaper labor costs, began shifting production to Mexico after the North American Free Trade Agreement was enacted in 1994.
“Many thought Mexico would be an alternative, but now that looks in jeopardy,” said Cliff Hodge, director of investments for Cornerstone Wealth in North Carolina.
“This was completely off the market’s radar and we’re seeing the resulting swift and sharp reaction,” he added.
Trump insists the tariffs will return those jobs back to the US.
“In order not to pay Tariffs, if they start rising, companies will leave Mexico, which has taken 30% of our Auto Industry, and come back home to the USA,” he tweeted Friday.