On Thursday night, President Trump announced that he was going to implement tariffs against Mexican goods “until Mexico substantially stops the illegal inflow of aliens.”
The proposed tariff is expected to start as a 5% tax on June 10 and would escalate by 5% each month until they reached 25%.
Economists expect that the tariffs will decrease trade between the two nations, slowing both economies, while Americans will likely face higher prices for goods imported from Mexico, including trucks, tractors, beer, and fresh produce.
U.S. stock markets plunged on this announcement, with the Dow futures contract falling to a four-month low on Friday morning.
U.S. exporters who sell to Mexico could be exposed if Mexico counters with tariffs of their own. During the last trade dispute with Mexico, U.S. agricultural products were targeted by Mexican counter tariffs. Fears of a repeat attack on U.S. food exports helped to accelerate a selloff in hog futures this week, touching a three-month low on Friday under 83 cents per pound.