Markets shaken as Trump announces shock Mexico tariffs – business live

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Donald Trump has come under intense pressure in recent days, after special investigator Robert Mueller made it clear that he was not confident that the US president had not committed a crime in obstructing justice. What better way to distract from that than dropping a bombshell announcement on trade?

In an evening move that took investors by surprise, Trump tweeted that he will impose a 5% tariff on all Mexican imports, gradually increasing to 25% unless illegal immigration into the US stops.

Donald J. Trump
(@realDonaldTrump)

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,..

May 30, 2019

Donald J. Trump
(@realDonaldTrump)

….at which time the Tariffs will be removed. Details from the White House to follow.

May 30, 2019

Michael Hewson, chief market analyst at CMC Markets, said:

This surprise announcement, coming as it does in the wake of the recent new trade agreement USMCA [US Mexico Canada agreement], was completely unexpected and could well upend the whole agreement.

It also makes it much more difficult for countries to take the US at its word when it comes to trade negotiations if its president can so easily lob a hand grenade into the path of an already agreed deal.

Investors have reacted to the move with a flight to safety. European stock market futures indicate a heavy move downward when market open.

The yield on benchmark sovereign bonds, which moves inversely to prices, fell sharply as investors rushed to buy the safe-haven assets. The yield on the US 10-year bond fell as low as 2.17%, the lowest since September 2017.

Japanese indices fell, with the Topix and Nikkei 225 down by 1.3% and 1.7% respectively. Major Japanese carmakers make a third of their vehicles in Mexico, according to Reuters. Shares in Mazda fell by 7%, while Toyota fell by 3%.

However, Chinese stock markets avoided the worst of the falls, with the CSI 300, which tracks shares in Shanghai and Shenzhen, falling by only 0.2%. That relatively gentle decline came despite purchasing manager index figures which suggested that Chinese manufacturing contracted in May faster than economists had expected.

In the UK, Legal & General today announced it will sell its general insurance business to Germany’s Allianz in order to focus on its core business of retirement savings. The deal will net £242m for L&G.