The automotive industry is bearing the brunt of trade-war crossfire again as U.S. President Donald Trump threatens to slap tariffs of as much as 25% on goods from Mexico, a key production hub for carmakers from Mazda to General Motors.
The Sydney Morning Herald reported that Mexico is the largest source of U.S. vehicle and auto-parts imports, meaning tariffs would increase costs for virtually every major manufacturer. In late night tweets on Thursday, Trump warned tariffs would start at 5 per cent on June 10 and increase to 25 per cent on October 1 unless Mexico stops immigrants from entering the US illegally.
The world’s largest automakers — including Ford, Toyota and Volkswagen — lost $US17 billion ($24.5 billion) in market value in Friday trading. The Bloomberg World Auto Manufacturers Index slumped as much as 2.2 per cent and ended the week at the lowest since July 2016.
“Tariffs will mean higher price tags on cars for sales in US and that will hit sales,” said Seiichi Miura, an analyst at Mitsubishi UFJ Morgan Stanley. “While the impact will differ for each carmaker, all of them have moved into Mexico.”
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