Automotive companies have the most to lose if the U.S. imposes tariffs on Mexican goods, with consumer staples, materials, and energy companies trailing closely behind, RBC Capital Markets said in a note Thursday.
With over $100 billion of autos and auto parts imported into the U.S. from Mexico, General Motors, Ford, American Axel, Autoliv and Lear are the stocks most at risk, RBC head of U.S. equity strategy Lori Calvasina said in the note.
Last month, President Donald Trump announced the United States will impose a 5% tariff on all Mexican imports starting on June 10 unless Mexican government does more to stop illegal migrants from entering the U.S. The tariffs, if enacted, will go up incrementally to 25% by October.
While RBC acknowledged China tariffs pose a greater risk to U.S. companies than tariffs on Mexico, the firm examined which sectors in the U.S. equity market are most at risk in an escalated trade war with Mexico.
“The new Mexico tariffs could be devastating to the entire auto value chain,” Calvasina said.
Companies like Advanced Auto Parts, Autozone, and O’reilly Autoparts have scores reflecting “negative” impact because they will likely have to pass price increases onto the consumer, the note said.
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