U.S. markets are looking to close the month as the worst May performance since 2012, in the wake of new tariffs that President Donald Trump has aimed at Mexico.
“Adding on to an already bearish trend, President [Donald] Trump announced plans for a 5% tariff on Mexican imports, with framework for continued escalation related to border security,” said Robbie Fraser, senior commodity analyst at Schneider Electric. “The move will add to existing trade and economic concerns, but also carries specific risks for crude and products, with Mexico being a key energy trade partner.”
The stock markets tumbled to new lows again today, rapidly approaching the March lows, amidst broadening trade fears, which now include Mexico and China, and slackening bond yields.
The Dow Jones Industrial Average dropped nearly 270 points so far, down over 1%, while the S&P 500 slid 1%. The Nasdaq Composite declined by 1%. All indices continue their decline.
In a series of tweets Friday morning, Trump tweeted that if his planned 5 percent tariff on all Mexican imports was to go into effect on June 10, a policy divulged less than a day ago, then not only would Mexico be forced to create a plan for the inflow of migrants crossing its borders headed for the United States, but there would be additional decreases in drug smuggling, that US manufacturers would return to domestic production, and that the US trade deficit with Mexico could be resolved.
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. Mexico must take back their country from the drug lords and cartels. The Tariff is about stopping drugs as well as illegals!
— Donald J. Trump (@realDonaldTrump) May 31, 2019
90% of the Drugs coming into the United States come through Mexico & our Southern Border. 80,000 people died last year, 1,000,000 people ruined. This has gone on for many years & nothing has been done about it. We have a 100 Billion Dollar Trade Deficit with Mexico. It’s time!
— Donald J. Trump (@realDonaldTrump) May 31, 2019
Trump trade advisors Navarro and Mulvaney had differing viewpoints than the president, claiming that the tariffs had little to do with trade and more to do with immigration, a totally separate issue.
“These are not tariffs as part of a trade dispute,” Mulvaney said on a call with CNBC this morning. “These are tariffs as part of an immigration problem. The USMCA is a trade matter and completely separate.”
“This is strictly about national security and threats to our economy from illegal immigration from a criminal enterprise,” Navarro said.
The Vanguard Total Stock Market Index Fund ETF Shares (VTI) is down over 1% today on the news, echoing the broader indices’ declines.
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