Last night Trump tweeted that on June 10th the US will impose a 5% tariff on all goods coming into the US from Mexico until the border crisis stops.
Tariffs are scheduled as follow until Mexico acts on the border crisis:
· tariffs will rise from 5% to 10% on July 1st
· 15% on August 1st
· 25% on October 1st where they will remain permanently “until Mexico substantially stops the illegal inflow of aliens coming through its territory
The biggest impact will be felt by STZ that produces its beer in Mexico. 73% of revenue comes from Mexican imports. On the other hand, 40% of COGS are denominated in Pesos, and a likely depreciation of the currency could actually offset some of the tariffs impact on STZ’s EPS. JP Morgan’s analyst sees a high-single-digit/low-double-digit negative impact on STZ’s EPS for the year.
STZ is trading down 5% on last night’s news.
Other names impacted are:
Union Pacific (UNP)- $2B+ of revenue to and from Mexico. Stock down 3% pre-market
Colgate: 10% sales from Mexico. No move pre-market
Pepsi: ~6% sales from Mexico. No move pre-market
[tag UNP] [tag STZ] [tag CL] [tag PEP]
Julie S. Praline
Director, Equity Analyst
Direct: 617.226.0025
Fax: 617.523.8118
Crestwood Advisors
One Liberty Square
Suite 500
Boston, MA 02109