General Motors ( GM ), Kansas City Southern ( KSU ), Constellation Brands ( STZ ) and other U.S. companies with big Canada and Mexico stakes lurched lower Wednesday afternoon on renewed worries that President Trump could pull out of Nafta.
[ibd-display-video id=3074971 width=50 float=left autostart=true] Two Canadian government sources told Reuters the country is bracing for Trump to announce that the United States will pull out of the North American Free Trade Agreement. The U.S. president has often derided the landmark 1994 treaty as harming the interests of American factory workers.
But while Trump seeks a better trade deal, U.S. multinationals such as GM and Ford Motor ( F ) fret that potential changes to trade terms could disrupt international supply chains and raise the prices of key goods, such as automobiles, for Americans.
On the stock market today , shares of GM turned sharply lower after the news broke out around 2 p.m. ET and closed down 2.4% at 43, testing support at the 50-day moving average . Kansas City Southern sank 3.6% to 106.54, breaching the 50-day line. Constellation lost 1.2%, losing support at the 50-day. Ford slipped 0.4%.
Exchange traded funds holding baskets of Canadian and Mexican stocks also turned sharply negative. IShares MSCI Mexico ( EWW ) slid 2.2%, slicing below the 50-day, and iShares MSCI Canada (EWC) gave up 1%.
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GM and Ford have invested heavily in auto plants in Mexico in recent years. Constellation is the leading importer of Mexican beers into the U.S., including popular brands such as Corona and Modelo, which account for a hefty portion of its revenue. Kansas City's extensive rail network crisscrosses several Southern and Midwestern states and reaches deep into Mexico.
The Canadian sources told Reuters they expect Trump to make his move when officials from the three Nafta countries meet Jan. 23-28 for talks in Montreal to update the treaty.
But they added a U.S. withdrawal could be merely a negotiating tactic to win concessions, doubting that the U.S. Congress would back such a move.
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