Stocks close at 3 month low, bond yields tumble, after Trump hits Mexico with tariffs

Stocks ended the month down more than 6 percent at a three month low on Friday as investors feared President Donald Trump’s surprise decision to impose tariffs on all Mexican imports, combined with the trade war with China, risks slowing economic growth.

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The Dow Jones Industrial Average posted its sixth weekly loss, the longest slump since 2011.

The U.S. will impose a 5 percent tariff on incoming Mexican products until the country limits illegal immigration on the U.S. southern border, Trump announced in a tweet Thursday night.

“The announcement of the US administration imposing tariffs on all US imports from Mexico starting at 5 percent on June 10 and escalating to 25 percent by October adds uncertainty in a global environment of already elevated trade tensions,” Elena Duggar, Associate Managing Director of credit rating agency Moody’s Investor Services, said.

“New tariffs would be credit negative for the US auto sector which relies heavily on imports from Mexico. New tariffs would also raise prices for US consumers as Mexico is the US’s largest supplier of agricultural imports, including vegetables, fruits, wine and beer, and processed fruits and vegetables,” the agency said.

Ticker Security Last Change %Chg I:DJI DOW JONES AVERAGES 24815.04 -354.84 -1.41% SP500 S&P 500 2752.06 -36.80 -1.32% I:COMP NASDAQ COMPOSITE INDEX 7453.148248 -114.57 -1.51%

Meanwhile, China is planning further retaliation against U.S. import tariffs by restricting exports of rare earth minerals used in electronics and may target specific American companies according to media reports.  The trade war is already affecting Chinese economic growth with the manufacturing purchasing managers index falling into a contraction below the 50 index level.  China’s official NBS manufacturing PMI fell to 49.4 in May, from 50.1 in April in data published Friday.

China, Canada and Mexico are the U.S.’s top trading partners,

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