New York (CNN Business)Stocks, already rattled by the US-China trade war, were set to fall sharply Friday after President Donald Trump announced new tariffs on Mexican imports.
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Dow (INDU) futures fell 300 points and the S&P 500 (SPX) and Nasdaq (COMP) futures were more than 1% lower.Trump said the United States will impose a 5% tariff on all Mexican imports starting on June 10, as a punishment for illegal immigrants crossing the Mexican border into the United States. The White House indicated the tariff would increase by increments of 5 percentage points each month until it reaches 25% in October.The tariffs on Mexico will be “highly disruptive,” Goldman Sachs analyst Alec Phillips wrote in a note to investors Friday. The threat sent the Mexican peso plunging about 2% against the US dollar. Mexico is one of America’s biggest trading partners and many US companies — including Ford (F) and Walmart (WMT) — rely on the country as a central part of their supply chains. Read MoreThe country is also a regional manufacturing hub for Japanese, South Korean and German automakers that assemble cars in Mexico and ship many of them to the United States. Shares in Mazda (MZDAF) and plunged more than 7%, while losses for Toyota (TM), Honda (HMC), Nissan (NSANF) and Volkswagen reached 3% or more. The broadside comes at a delicate time in global financial markets.The Dow is on track to close lower this week, for the sixth week in a row. That would be the worst losing streak since summer 2011. With one trading session left, the Dow has fallen nearly 5.4% in May. The last time stocks fell in May was in 2012, when the Do w fell 6.2%. This has been the worst month since December, when the Dow fell about 8.7%US stocks have slumped and bond yields have plunged in part because of worries about the escalating trade war between the United States and China. Investors fear the tit-for-tat tariffs — and threats of non-tariff retaliation — will slow economic growth, dent consumer confidence and derail business investment. Imposing tariffs on Mexico may only exacerbate those trade concerns. The US Chamber of Commerce has estimated that about 6 million US jobs depend on trade with Mexico.