On Friday, after the announcement made by Trump’s administration about tariffs on all exports to The United States, Asian and European stocks and US futures fell. China confirmed that it has planned out how to limit the supply of critical rare-earth metals from America and in the month of May Chinese manufacturing declined.
According to a tweet by Trump, “the United States will implement a 5% Tariff on all goods coming into our Country from Mexico on June 10th until such time as prohibited migrants entering through Mexico our Country, STOP”. He further added, “The Tariff will regularly increase in anticipation of the Illegal Immigration problem is remedied at which time the Tariffs will be removed.”
According to the statement given by Whitehouse, “The tariffs will increase monthly until they reach 25 percent at the beginning of October and stay at that level until Mexico considerably stops the illegitimate inflow of aliens through its region.” The duties have worldwide implications as many of multinationals run in Mexico including General Motors, Toyota, Ford, John Deere, and Ford.
“Donald Trump is going all out here, the move to start a trade war on another front has shaken sentiment in an already fragile market,” said by Jasper Lawler who is head of research at London Capital Group.
Stocks exposed to Mexico like automakers Fiat Chrysler and Volkswagen both felt the pain with the Fiat Chrysler trading 4.6% down. However, banks like Santander and BBVA which both have important presences in Mexico dropped; Santander dropped to 1.7% and BBVA to 3.8%.
Traders also take a look on the rising evidence that China can limit exports of rare-earth metals to the United States, where they are used in several electronic devices such as missile-defense systems, smartphones, and car batteries. The administration has mapped out how it will influence its control of the vital resources to hurt the economy of the US if the business disagreements escalate more.
Furthermore, in May Chinese manufacturing slowed because the US tariffs depressed activity. As per China’s National Bureau of Statistics, the monthly PMI survey showed a reduction of 0.7 percentage points to 49.4%.
Although the manufacturing decline is ‘increasing concerns over a worldwide growth slowdown’ but the rare-earth danger ‘represents a newly aggressive posture from China’, said by Jasper Lawler. “Triple hit of bad news which comes today has proved too much for investors to stomach”, he further added.
