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Union Pacific, PepsiCo and others could see their sales take a hit in a US-Mexico trade war

Union Pacific cargo train with multiple box cars approaching the camera as it prepares to cross a level railroad crossing near Jamestown, California, December 17, 2017.

Smith Collection/Gado | Archive Photos | Getty Images

A number of American companies could see their sales decline if trade relations between the United States and Mexico deteriorate as a result of the Trump administration’s new tariffs.

CNBC screened the components of the S&P 500 by their respective revenue exposure to Mexico, revealing that Kansas City Southern, Union Pacific, PepsiCo and Nucor were among those with the highest proportion of sales. Those stocks were down 6.3%, 2.1%, 0.7% and 1.8%, respectively, on Friday.

President Donald Trump said Thursday night that he will impose a 5% tariff on all Mexican imports starting June 10 if Mexico doesn’t take steps to secure its border with the United States, potentially undermining the recently negotiated deal between the U.S., Canada and Mexico.

Trump’s Mexico tariffs also represent the White House’s latest attempt to pressure an economic partner through the use of trade levies, a tactic Trump has relied on throughout his negotiations with China. The administration imposed 25% tariffs on $200 billion worth of Chinese imports earlier this month following a breakdown in talks between Beijing and Washington.

While the aforementioned companies could be in for pain based on the percentages of their total sales coming from Mexico, other American companies that produce or source input in the country also sold off on Friday.

Shares of automakers, which import car components from Mexico, declined: Fiat Chrysler dropped nearly 5% after Friday’s opening bell, while General Motors was down 3.8% and Ford skidded 2.7%.

GM and Fiat Chrysler import 29% and 24%, respectively, of the total parts for its cars and trucks from Mexico, according to a Deutsche Bank analysis. The firm added that Ford has the second highest total imported vehicles from Mexico at 17%, behind Fiat Chrysler.

Corona beer maker Constellation Brands, meanwhile, imports 75% of its beer portfolio from Mexico, according to Morgan Stanley. The brokerage added that the 5% tariffs on Mexican goods would shave off nearly 4% from the company’s profits. Shares were down more than 6% on Friday.

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