High Stakes for Global Companies in Trumps Latest Tariff Threats

Mexico’s pitch to companies considering the American market was simple.Worried about vulnerable supply chains? Need to reduce your reliance on China? Want an inexpensive spot close to the United States with favorable trade rules? Try Mexico.Thousands of companies, from family enterprises to powerhouse brands, in Asia, Europe and elsewhere have done just that in recent years.

Adidas, Samsung, Honda, Hyundai, Nestle, Volkswagen, Volvo, Lego and more crowd Mexico’s industrial parks.That parade has grown following pandemic-related supply chain nightmares and increasing political tensions between the United States and China.Canada — a key partner in the North American production network — has also benefited.

Last year, Honda announced plans to invest around $11 billion in new electric vehicle and battery production plants in Ontario, alongside its existing facilities.Toyota and Volvo also have plants in Canada.But now, President Trump’s threat to impose a 25 percent tariff on all imports from Mexico and Canada as early as Saturday has hit companies like a freak ice storm in summer.“If you’re an investment officer sitting in a C-suite, how do you decide where you’re going to put money?” asked Mary E.

Lovely, a senior fellow at the Peterson Institute for International Economics in Washington.President Trump himself signed a new trade pact with Mexico and Canada in 2020 during his first term.Now he is, in effect, ripping up that contract.It’s disorienting for any business, said Ms.

Lovely, because trade agreements are intended to create “safe spaces” for long-term investment.Mr.Trump also said he would impose new 10 percent tariffs on all imports from China starting on Saturday.So far, other Asian as well as European trading partners escaped the first round of presidential trade deadlines.Yet they still have to brace for the unexpected fallout from tariffs slapped on Mexico and Canada.Japan alone has more than 1,300 companies operating in Mexico...