Top Stories
Top Stories
Transportation

Navistar says too early to assess impact of proposed US tariffs on Mexico

Key Points
  • Truck maker Navistar International said on Tuesday it was too early to assess the impact on its Mexico operations from possible U.S. tariffs on the country.
  • Last week, President Donald Trump threatened to impose 5% tariffs on all Mexican imports starting June 10 if the country does not halt the flow of illegal immigration across the U.S.-Mexican border.
  • This could hurt carmakers and auto parts suppliers as Mexico is the world's second largest auto market after China.
A man cleans a Navistar International Truck at Rechtien International Trucks Inc., in Miami, Florida.
Mark Elias | Bloomberg | Getty Images

Truck maker Navistar International said on Tuesday it was too early to assess the impact on its Mexico operations from possible U.S. tariffs on the country.

The company, which makes two-thirds of its trucks in Mexico, is working with trade associations and continues to monitor situation regarding tariffs, Chief Executive Officer Troy Clarke said on a post-earnings call with analysts.

Last week, President Donald Trump threatened to impose 5% tariffs on all Mexican imports starting June 10 if the country does not halt the flow of illegal immigration across the U.S.-Mexican border. The tariffs would increase monthly to up to 25% on Oct. 1.

This could hurt carmakers and auto parts suppliers, who have been making vehicles and parts in Mexico for years, taking advantage of the country's cheap labor, trade deals and proximity to the United States, the world's second largest auto market after China.

"Potential tariffs on Mexico would be a significant headwind," said JP Morgan analyst Ann Duignan in a note, adding that about 57% of the company's truck production in Mexico could be subject to tariffs.

Navistar, however, raised its 2019 revenue forecast to $11.25 billion-$11.75 billion from $10.75 billion-$11.25 billion. The outlook does not include the impact of the possible tariffs.

The company beat second quarter estimates for adjusted profit and revenue helped by higher sales of class 6-8 truck, buses in the United States and Canada.

Excluding items, Navistar earned $1.06 per share on revenue of $3 billion, beating the average analyst estimate of 89 cents per share on revenue of $2.7 billion, according to IBES data from Refinitiv.

Shares of the company, which rose as much as 9.2%, pared gains to trade up about 4% at $32.39 by late morning.

Next Article
Key Points
  • Farmer sentiment plunges to its lowest level since October 2016 as future economic conditions on the farm worsen and the trade war with China escalates, according to a survey released Tuesday.
  • May's Purdue University/CME Group Ag Economy Barometer is now at levels that have erased all improvements recorded following the November 2016 election.
  • The weaker farm sentiment also comes as corn and soybean producers in the Midwest face one of the wettest spring seasons in decades and the risk of lower-yielding crops.