General Motors tumbles after Trump threatens to slap tariffs on Mexican products (GM, F)
- General Motors tumbled almost 5% early Friday after President Trump announced a new round of tariffs on Mexico.
- The automaker produces almost 30% of its North American production in Mexico, according to an analyst estimate.
- Watch General Motors trade live.
Shares of US automakers plunged early Friday, the morning after President Donald Trump announced plans to slap tariffs on Mexican goods over illegal immigration. GM, which is the US automaker with the largest share of production sourced from Mexico, fell 5%. Its rival Ford was down more than 3%.
The tariffs, scheduled to take effect June 10 on all Mexican goods imported by the US, will begin at 5% and rise as high as 25% by October unless "the illegal immigration problem is remedied," according to Trump.
"Mexico must step up and help solve this problem," the White House said in a statement. "We welcome people who come to the United States legally, but we cannot allow our laws to be broken and our borders to be violated. For years, Mexico has not treated us fairly — but we are now asserting our rights as a sovereign nation."
Automakers would be particularly affected by the new tariffs, as Mexico represents a key component of their global supply chain. The RBC analyst Joseph Spak estimates that General Motors sources 29% of its North American production from Mexico, while Ford sources 10%.
GM produces some of its iconic full-size pickups in Mexico, according to Spak. The vast majority of US-Mexico trade is intracompany, with US companies sourcing goods from their affiliates in Mexico. Much of that trade is related to the auto industry, according to Deutsche Bank's chief economist, Torsten Slok.
Markets overall reacted negatively to this new front in Trump's trade war, which now extends to China and Europe and could reach Japan and the UK.
GM is up 4% year-to-date.
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