By Richa Naidu
LONDON (Reuters) – Procter & Gamble (NYSE:) and Unilever (LON:) are amongst large packaged items corporations that might be uncovered if U.S. President-elect Donald Trump goes forward with a risk to impose tariffs on Mexico, information seen solely by Reuters reveals.
Trump warned days earlier than his win in opposition to Democrat nominee Kamala Harris that he would hit Mexico and China with 25% tariffs until each governments moved to cease the circulation of fentanyl into the US.
Whereas shopper corporations have spoken publicly about their investments in Mexico to create a provide chain hub for the US, the diploma to which these provide chains make them uncovered to U.S. protectionism has not beforehand been reported.
About 10% of P&G’s third-quarter shipments have been from Mexico, in accordance with invoice of lading figures shared solely with Reuters by import information supplier ImportYeti. Round 2% of Unilever’s sea imports into the US come from Mexico, the information reveals.
Unilever and P&G declined to remark. The invoice of lading information doesn’t embrace air imports or the truckloads of products corporations carry into the US by way of street.
Each corporations and different large shopper teams resembling Pepsico (NASDAQ:), producer of fizzy drinks and Lay’s chips, have collectively invested lots of of hundreds of thousands of {dollars} of their Mexican provide chains.
That has led some traders since Trump’s win on Wednesday to look at Unilever and its friends’ publicity to Mexico and China, the place these corporations have manufacturing bases and in addition derive a bit of income from gross sales.
Gabriela Siller, director of study at Banco Base in Mexico, mentioned exports account for 40% of Mexico’s gross home product and 80% of them go to the US.
Levying the tariffs on staple items like packaged meals and cleaning soap may elevate costs of Individuals’ on a regular basis gadgets if corporations are pressured to soak up the upper prices.
Throughout Trump’s first time period within the White Home, the US imposed deep tariffs on items from a number of nations.
The commerce struggle and subsequent Covid-19 pandemic highlighted how reliant international corporations are on Chinese language manufacturing and provide chains, prompting companies – significantly people who make packaged items – to show to “nearshoring”, or producing items nearer to the place they’re offered.
Unilever and Pepsico and different shopper firm executives have up to now talked publicly about shoring up their Mexico infrastructure to assist help international provide chains.
“P&G and different CPG (shopper packaged items) corporations that do import, they could be affected however that basically stays to be seen,” mentioned Michael Ashley Schulman, chief funding officer at Operating Level Capital.
P&G, the world’s greatest private items and homecare firm with manufacturers together with Gillette, Ariel and Head & Shoulders, mentioned in 2019 it could make investments $4 billion in Mexico within the subsequent two years.
The invoice of lading information reveals P&G ships in much more product from Mexico than Unilever or Pepsico, however has decreased sea imports from that nation since 2017.
Within the third quarter of this 12 months, P&G imported a minimum of 4.5 million kilograms of product by sea, down from a minimum of 7.9 million kilograms within the third quarter of 2017 early in Trump’s first presidency, in accordance with the information.
Unilever, within the newest quarter, imported by sea over 2 million kilograms of product like Pond’s face cream and Rexona deodorant into the US, in accordance with the information.
That was up from a minimum of 1.4 million kilograms of product imported within the third quarter of 2017, the information confirmed.
In distinction, Unilever’s imports from China fell by about 24% from the third quarter of 2017 to a minimum of 296,000 kilograms in July-September this 12 months, in accordance with the figures.
Unilever mentioned final 12 months it could construct a producing plant within the northern Mexican border state of Nuevo Leon as a part of a $400 million funding within the nation over the subsequent three years.
