DESPARDES News Monitor — President Donald Trump has opened a new front in his ongoing tariff war with China: Mexico.
Global stock markets have shed over $2 trillion in value in May, according to Reuters, as the U.S.-China trade conflict escalates. There are now fears of a trade-related economic slowdown intensifying after U.S. President Donald Trump on Friday threatened Mexico with tariffs.
Washington says it will impose a 5% tariff on Mexican goods beginning June 10, which would then rise steadily to 25% until illegal immigration across the countries’ border is stopped. Trump tweeted the decision late Thursday, catching markets by surprise.
President Trump has been warned by the west’s most influential economics thinktank that further escalation of the US-China trade war would unleash significant damage not only for American economy, but for the rest of the world as well.
According to Reuters, the S&P 500 dropped 1.3%, on Friday, bringing its loss for May to 6.6%, equivalent to about $1.6 trillion of its market capitalization– the report cited Refinitiv’s Datastream.
The Paris-based Organization for Economic Co-operation and Development (OECD) said an intensification of the dispute between the two economic powers would likely knock as much as 0.7% off the level of global GDP by 2021-22.
Under such a scenario, the hit to the world economy from higher tariffs could be quantified at almost $600bn. And that’s not counting its impact on consumers in US.
Tariff war is already hurting the farmers in US. Several big companies have complained that the tariffs damage their profits, including iPhone maker Apple. Shoe giants Nike and Adidas are among 170 other firms who have urged Trump to end trade war, claiming higher tariffs are ‘catastrophic’ for consumers.