Shares of General Motors Company (GM), Ford Motor Company (F) and other automakers slumped after President Donald Trump threatened to impose trade tariffs on Mexico unless the country stops illegal immigration into the US.
The White House said Thursday that the US will impose a 5% levy on all Mexican imports from June 10. The duties will be stepped up on a monthly basis to 25% on Oct. 1 if Mexico fails to “reduce or eliminate the number of illegal aliens” crossing into the US.
“The tariff will gradually increase until the illegal immigration problem is remedied…at which time the tariffs will be removed,” President Trump said in a Twitter (TWTR) message on Thursday.
US government data show auto and auto parts, which account for the biggest chunk of US imports from Mexico, stood at $93.3 billion in 2018.
Shares of General Motor and Ford were down 5.7% and 4%, respectively, in pre-market trading. Honda Motor Co. (HMC) from Japan was 2.5% lower pre-bell. German automakers BMW (BMW.DE) and Volkswagen (VOW.DE) fell 2% and 2.8%, respectively, in local markets. Fiat Chrysler Automobiles N.V. (FCAU) fell more than 5% pre-bell.