Now though, things are getting really real because the Trump administration is going after Mexico. Specifically, Trump is calling for a 5% tariff on all goods coming from Mexico, one that would increase until hitting a ceiling of 25% in October. Why is he doing this? Illegal immigration -- or at least that's what he's saying, according to a report published Friday by Reuters.
This 5% tariff would drive prices up on a massive number of goods, ranging from Mexican Coke and Topo Chico to nuclear reactor parts and cars built by companies like
and even vehicles from German and Asian manufacturers like BMW, VW and
. Some estimates suggest that this tariff would boost US car prices by over $1,000 per unit.
Given the fragile state that the American automotive market is in right now, it's unlikely that manufacturers could realistically pass that extra cost onto customers without suffering further drops in sales. That means the companies would have to eat the cost and cut their thin margins even thinner.
Trump's threats have caused stock prices to slip for auto manufacturers from all over the world. In Japan,
stock dropped by 7%, while
dropped by 5%,
by 4% and Toyota by 2%. In Korea,
's shares declined by 4.2% and
slipped by 0.7%. The Germans' stock fell by as much as 2.9%.
Mexico's automotive industry is massive, and the bulk of it feeds the American market. According to Reuters, cars and car parts are Mexico's most significant export, with a value totaling $93.3 billion in 2018.
The 2018 Ford Fiesta proves that a little dab will do ya