Procter & Gamble and Unilever are among the large packaged goods companies that would be exposed if the president-elect of the United States, donald trumpkeep going with its threat to impose tariffs on Mexicoshow data seen exclusively by Reuters.
Days before his victory against the Democratic candidate Kamala HarrisTrump warned that he would impose 25% tariffs on Mexico and China unless both governments take action to stop the flow of fentanyl into the United States.
While consumer companies have spoken publicly about their investments in Mexico to create a supply chain hub for the United States, the extent to which those supply chains expose them to the protectionism United States.
About 10% of shipments P&G in the third quarter They came from Mexico, according to freight guide figures shared exclusively with Reuters by import data provider ImportYeti. About 2% of Unilever’s ocean imports to the United States come from Mexico, the data shows.
Unilever and P&G declined to comment. The freight bill data did not include air imports or truckloads of goods that companies bring into the United States by road.
Both companies and other large consumer groups such as Pepsicoproducer of Lay’s soft drinks and potato chips, have collectively invested hundreds of millions of dollars in their Mexican supply chains.
That has led some investors since trump victory Wednesday to examine Unilever and its peers’ exposure to Mexico and China, where these companies have manufacturing bases and also earn a share of sales revenue.
Gabriela Sillerdirector of analysis at Banco Base in Mexico, said that exports represent 40% of Mexico’s Gross Domestic Product and 80% of them go to the United States.
Impose tariffs on basic products such as packaged foods and soap could raise prices of everyday items of Americans if companies are forced to absorb the increased costs.
During Trump’s first term in the White House, the United States imposed heavy tariffs on products from several countries.
The trade war and the later Covid-19 pandemic highlighted the dependence of global companies on Chinese manufacturing and supply chains, leading companies – particularly those making packaged goods – to turn to the “nearshoring”or production of goods closer to where they are sold.
Unilever, Pepsico and other consumer company executives have spoken publicly in the past about strengthening their infrastructure in Mexico to support global supply chains.
“P&G and other consumer goods companies that matter may be affected, but that remains to be seen,” said Michael Ashley Schulman, chief investment officer at Running Point Capital.
P&G, the world’s largest personal goods and home care company with brands such as Gillette, Ariel and Head & Shoulderssaid in 2019 that it would invest $4 billion in Mexico over the next two years.
Freight guide data shows that P&G ships much more product from Mexico than Unilever or Pepsico, but has reduced ocean imports from that country since 2017.
In the third quarter of this year, P&G imported at least 4.5 million kilograms of product by sea, down from at least 7.9 million kilograms in the third quarter of 2017 early in Trump’s first presidency, according to the data.
Unilever, in the last quarter, imported by sea more than 2 million kilograms of products such as Pond.s facial cream and deodorant Rexona to the United States, according to the data.
That figure was up from at least 1.4 million kilograms of product imported in the third quarter of 2017, the data showed.
By contrast, Unilever’s imports from China fell around 24% from the third quarter of 2017 to at least 296,000 kilograms between July and September this year, according to the figures.
Unilever said last year that would build a manufacturing plant in the state of Nuevo Leónas part of a $400 million investment in the country over the next three years.
