Stocks on Wall Street tumbled after the announcement of fresh US tariffs on Mexico. The news also caused the Mexican peso to plunge in the foreign exchange market.
The Dow Jones Industrial Average ended the day 1.4% down, with stocks having dropped 6.7% over the course of May, the first negative month of 2019. The S&P 500 slumped 1.3% and the Nasdaq Composite Index was down 1.5% at the end of trading.
Trump's announcement also caused the Mexican peso to tumble against the dollar. The peso lost as much as 3.4% at one point, its worst single-day loss since October. It was down 2.65% at 19.6485 per dollar.
The yield on the 10-year Treasury Bond sank to 2.13%, its lowest level since mid-2017, as investors fled to safer investments.
Auto industry affected
The new US trade war front is hitting the automotive industry particularly hard, with General Motors and Fiat Chrysler each experiencing a 4% drop in their share price. Many American automakers import vehicles and parts into the US from Mexico.
"The auto sector, and the 10 million jobs it supports, relies heavily upon the North American supply chain and cross border commerce to remain globally competitive," the Alliance of Automobile Manufacturers said. The group represents companies that account for some 70% of all cars and light trucks sold in the US.
"Any barrier to the flow of commerce across the US-Mexico border will have a cascading effect — harming US consumers, threatening American jobs and investment and curtailing economic progress."
Trump's tariffs and who they target
US President Donald Trump has repeatedly boasted that the tariffs he has imposed on trading partners are a financial windfall but, research shows it is Americans who bear the brunt of the impact. DW has an overview.
Image: picture-alliance/newscom/B. Greenblatt
Solar panels and washing machines
The first round of tariffs in 2018 were on all imported washing machines and solar panels — not just those from China. A study by economists from the Federal Reserve Bank of
New York, Columbia University, and Princeton University found that the burden of Trump's tariffs — including taxes on steel, aluminum, solar panels falls entirely on US consumers and businesses who buy imported products.
On Friday May 10, 2019 President Donald Trump imposed sanctions on $200 billion (€178 billion) worth of Chinese goods. The move raised tariffs from 10% to 25% on a range of consumer products, including cell phones, computers and toys. China's Commerce Ministry said it "deeply regrets" the US decision.
Image: Getty Images/AFP/STR
Issues with the EU
In April 2019, the United States said it wanted to put tariffs on $11.2 billion worth of goods from the EU. The list includes helicopters and aircraft from Airbus as well as European exports like famous cheeses such as Stilton, Roquefort and Gouda, wines and oysters, ceramics, knives and pajamas.
Image: Imago/Ralph Peters
EU fights back
The EU imposed import duties of 25% on a $2.8 billion range of imports from the United States in retaliation for US tariffs on European steel and aluminum. Targeted US products include Harley-Davidson motorcycles, bourbon, peanuts, blue jeans, steel and aluminum.
Image: Getty Images/AFP/M. Ralston
European automakers next?
May 17, 2019 is the deadline for President Trump to decide on imposing tariffs on vehicle imports from the EU. According to diplomats, Germany, whose exports of cars and parts to the United States are more than half the EU total, wants to press ahead with talks to ward off tariffs on automakers Volkswagen, Mercedes and BMW.
Image: picture alliance/dpa
India not exempt
India, the world's biggest buyer of US almonds, on June 21, 2018 raised import duties on the nuts by 20% and increased tariffs on a range of other farm products and US iron and steel, in retaliation for US tariffs on Indian steel. Trump said last month that he would end preferential trade treatment for India, which would result in US tariffs on up to $5.6 billion of imports from India.
Image: Getty Images/AFP/R. Schmidt
North American neighbors in tariff spat
Mexico on June 5, 2018 imposed tariffs of up to 25% on American steel, pork, cheese, apples, potatoes and bourbon, in retaliation for US tariffs on Mexican metals. While to the north, Canada on July 1 imposed tariffs on $12.6 billion worth of U.S. goods, including steel, aluminum, coffee, ketchup and bourbon whiskey in retaliation for US tariffs on Canadian steel and aluminum.
