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May 31, 2019, 11:44 AM UTC
By Lucy Bayly
Wall Street was sharply lower Friday morning, with the Dow Jones Industrial Average set to open down almost 300 points as traders balanced the impact of President Donald Trump’s sudden imposition of a 5 percent tariff on all goods from Mexico.
Futures on the S&P 500 and Nasdaq Composite indices also fell, with a decline of 1.1 percent and 1.4 percent, respectively.
“On June 10th, the United States will impose a 5% Tariff on all goods coming into our Country from Mexico, until such time as illegal migrants coming through Mexico, and into our Country, STOP. The Tariff will gradually increase until the Illegal Immigration problem is remedied,” Trump tweeted late on Thursday, marking an escalation in his fight to build a border wall and stem the flow of asylum seekers.
The dramatic move is another hit to markets still reeling from the potential economic effects of the latest round of tit-for-tat tariffs in the trade war with China. Wall Street has shown increased volatility in recent weeks amid fears the ongoing battle would exacerbate the global economic slowdown and lead to a potential recession in the U.S.
As a result of the trade war with China, Mexico has risen to become America’s biggest trade partner, sending $347 billion in goods to the U.S., including $93 billion in cars, trucks, and automotive parts; $27 billion in computers; and $15 billion in produce, according to figures from Goldman Sachs.
Negotiations between Beijing and Washington stalled earlier this month after China reneged on a number of key components in the deal. That backtracking led to a series of fiery tweets from Trump, who slapped additional tariffs on $200 billion of Chinese imports. The Chinese have since said they will not respond to “naked economic terrorism” or “bullying” in order to secure a trade deal.
Hopes are pinned on an upcoming meeting between Trump and his Chinese counterpart, President Xi Jinping. The two are set to convene June 29 in Osaka, Japan, for the G-20 economic summit.
Economists and lawmakers criticized the Mexico tariffs, pointing out that Trump’s decision could jeopardize the passage of the USMCA, the trilateral trade agreement between the U.S., Mexico, and Canada that will replace NAFTA and is currently awaiting ratification by the three parties.
Senate Finance Committee Chairman Chuck Grassley, R-Iowa, said the move was a “misuse of presidential tariff authority and counter to congressional intent.”
“Social problems cannot be resolved with taxes or coercive measures,” Mexican President Andrés Manuel López Obrador told Trump on Thursday in a firmly worded letter that also accused the U.S. of being a “ghetto” that mistreated migrants.
López Obrador said he had dispatched his Foreign Minister to Washington for a meeting between the U.S. and Mexico on Friday.
In a statement, the White House said the new tariffs would go into effect on June 10 and would rise by 5 percentage points every month until they hit 25 percent on Oct. 1.
Visit the Source: https://www.nbcnews.com/business/economy/wall-street-takes-nosedive-after-trump-announces-mexico-tariffs-n1012341?cid=public-rss_20190531