Mexico WAS the biggest winner from the US-China trade war...

FRI, MAY 31, 2019

YOUR AFTERNOON NEWS UPDATE AND MARKET ACTION FROM CNBC

AS OF FRI, MAY 31, 2019 • 12:07 ET

DJIA		24940.69
		-0.91%	-229.19

S&P 500		2764.21
		-0.88%	-24.65

NASDAQ		7492.77
		-0.99%	-74.94

EDITOR'S NOTE

One of the biggest early beneficiaries of the U.S. slapping higher tariffs on Chinese imports has been Mexico.

GoPro, for instance, said it would start making U.S.-bound cameras in Mexico instead of China. The CEO of Polaris, the snowmobile and ATV maker, said "if this [is] not resolved, we would have no choice but to move production to Mexico." Zach Karabell even wrote that President Trump's trade war is making Mexico great again.

Well...not so fast.

Last night, President Trump tweeted that he "will impose a 5% tariff on all goods coming into our country from Mexico," which will gradually increase "until the illegal immigration problem is remedied."

Peter Navarro elaborated on our air this morning that "this is strictly about national security," citing the influx of migrants here that Mexico has refused to stop. He said this tactic by the president "is a brilliant move to get Mexico's attention and get them to help us," especially since our Congress refuses to act on the issue.

The White House still wants to pursue its new NAFTA deal with Mexico and Canada, and in fact just hours before the President's move last night, Trade Rep. Lighthizer sent a letter that forces Congress to start considering the bill. "This is not a tariff war with Mexico," Navarro insisted.

But business groups are fuming. Kayla Tausche just reported that trade groups including the Chamber of Commerce are actually now considering a lawsuit against the White House or a member of Customs & Border Patrol over this. The automakers in particular are a focal point, all of which are seeing their shares slump today.

And here's the thing, as Derek Scissors of AEI points out: tariffs on Mexico, especially if they escalate from here, are actually a huge win for China. As we saw, that country was quickly losing business to Mexico--which may slow now if Mexico is also getting more expensive.

None of this, Scissors says, means it is acceptable "for Mexico to allow tens of thousands of migrants from other countries to pass through to the American border [or] China to continue to steal American technology." But he has been arguing that tariffs are not the right tool; sanctions, at least on China, would be better.

We'll have much more at 1 p.m. See you then!

Kelly

Kelly Evans

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