A general view showing the Mexico City skyline shrouded in air pollution, in Mexico City, Mexico, 17 May 2017. The first phase of environmental continence by ozone continues in the capital because of the high pollution rates recorded. Given this scenario, it has been decided to maintain phase one of environmental contingency by ozone in the Metropolitan Zone of the Valley of Mexico, integrated by Mexico City and municipalities of the States of Mexico and Hidalgo.Environmental pollution in Mexico City - 17 May 2017

President Donald Trump’s latest trade spat — with Mexico — gave investors on Wall Street and retail and apparel groups a chill.

The Dow Jones Industrial Average fell more than 300 points to 24,859.10 in morning trading after Trump unexpectedly revealed plans late Thursday to place 5 percent tariffs on all Mexican imports starting June 10 unless the country can curb illegal immigration into the U.S.

Among the companies feeling the pressure and losing ground were Gap Inc., down 11.4 percent to $18.25 on the back of disappointing first-quarter earnings; Tailored Brands Inc., 10 percent to $5.30; Stitch Fix Inc., 3.7 percent to $22.63; Capri Holdings, 3.7 percent to $32.55; Nordstrom Inc., 2.8 percent to $31.21; Macy’s Inc., 2.7 percent to $20.19, and G-III Apparel Group, 2.5 percent to $26.25.

For retailers, who are already reviewing their supply chains amid the escalating trade war with China, the aggressive move was yet another blow.

“On June 10th, the United States will impose a 5% Tariff on all goods coming into our Country from Mexico, until such time as illegal migrants coming through Mexico, and into our Country, STOP. The Tariff will gradually increase until the Illegal Immigration problem is remedied, at which time the Tariffs will be removed,” Trump tweeted.

The White House later explained that tariffs will rise to 15 percent on August 1, 20 percent on September 1 and to 25 percent on October 1, where they will permanently remain “until Mexico substantially stops the illegal inflow of aliens coming through its territory.”

Such a move would disrupt retailers who have operations there, as well as those who had been looking to shift some production to Mexico if the Trump administration follows through with its threat to slap 25 percent tariffs on all Chinese imports, including apparel and footwear.

Official data shows that production shift was already starting to happen with Chinese imports of some goods that have already been targeted, like hats and leather goods, decreasing in 2018 while imports of those same products have been increasing from Mexico.

Textile and apparel imports from Mexico totaled $5.86 billion in 2018, up from $5.78 billion in 2017. Overall, imports totaled around $350 billion last year, up 10 percent on 2017.

“This is unfathomable,” said Rick Helfenbein, president and CEO of the American Apparel and Footwear Association. He warned that because of President Trump’s tax increase, Americans will pay more for everything from jeans to cars to computers to machinery.

“More than 200,000 jobs in our industry, and countless more across the United States, depend on strong trade linkages with Mexico. Whether imposed at 5 percent or 25 percent, these tariffs put American jobs in jeopardy,” he added.

The announcement came as a surprise to many as earlier on Thursday, the U.S. formally began the process of approving of the United States Mexico Canada Agreement.

It was designed to replace the North American Free Trade Agreement and was due to be sent to Congress within the next 30 days.

David French, senior vice president for government relations at the National Retail Federation, said: “Forcing Americans to pay more for produce, electronics, auto parts and clothes isn’t the answer to the nation’s immigration challenges, and this certainly won’t help move USMCA forward.”

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