Latin America ETFs in Play as Trump Announces 5% Tariff on Mexican Imports

U.S. President Donald Trump turned his attention to Mexico in the latest tariff wars by announcing a 5 percent tariff on all Mexican imports, which will begin on June 10. The move came as Trump urged Mexico to “reduce or eliminate the number of illegal aliens” entering the U.S.

Aside from the Twitter announcement, the White House formally opined on the latest tariff proposal.

“If the illegal migration crisis is alleviated through effective actions taken by Mexico, to be determined in our sole discretion and judgment, the Tariffs will be removed. If the crisis persists, however, the Tariffs will be raised to 10 percent on July 1, 2019,” the White House said.

“Tariffs will be increased to 15 percent on August 1, 2019, to 20 percent on September 1, 2019, and to 25 percent on October 1, 2019,” it added. “Tariffs will permanently remain at the 25 percent level unless and until Mexico substantially stops the illegal inflow of aliens coming through its territory.”

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Latin America ETFs in Play

The U.S.-China trade impasse paved the way for discounts in a lot of U.S. equities, but it also put the red tag sale in the emerging markets (EM) space. With this latest move against Mexico, one corner of EM that investors may not have considered is within Latin America.

While most investors might have been driven away by the losses in EM during much of 2018, savvy investors who were quick to see the opportunity viewed EM as a substantial markdown. From a fundamental standpoint, low price-to-earnings ratios in emerging markets ETFs have made them prime value plays as capital inflows continue in 2019.

EM can also provide opportunities for dividend-seeking investors. Latin America, once again, could be an alternative investors may not have yet taken into consideration.

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