Unilever, Procter & Gamble face risk from Trump’s threatened Mexico tariffs

LONDON: Procter & Gamble and Unilever are among big packaged goods companies that would be exposed if US President-elect Donald Trump goes ahead with a threat to impose tariffs on Mexico, data seen exclusively by Reuters shows.

Trump warned days before his win against Democrat nominee Kamala Harris that he would hit Mexico and China with 25% tariffs unless both governments moved 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 degree to which those supply chains make them exposed to US protectionism has not previously been reported.

About 10% of P&G’s third-quarter shipments were from Mexico, according to bill of lading figures shared exclusively with Reuters by import data provider ImportYeti. Around 2% of Unilever’s sea imports into the United States come from Mexico, the data shows.

Unilever and P&G declined to comment. The bill of lading data does not include air imports or the truckloads of goods companies bring into the United States via road.

Both companies and other big consumer groups such as Pepsico , producer of fizzy drinks and Lay’s chips, have collectively invested hundreds of millions of dollars in their Mexican supply chains.

That has led some investors since Trump’s win on Wednesday to examine Unilever and its peers’ exposure to Mexico and China, where these companies have manufacturing bases and also derive a chunk of revenue from sales.

Gabriela Siller, director of analysis at Banco Base in Mexico, said exports account for 40% of Mexico’s gross domestic product and 80% of them go to the United States.

Levying the tariffs on staple goods like packaged food and soap could raise prices of Americans’ everyday items if companies are forced to absorb the higher costs.

During Trump’s first term in the White House, the United States imposed deep tariffs on goods from several countries.

The trade war and subsequent Covid-19 pandemic highlighted how reliant global companies are on Chinese manufacturing and supply chains, prompting firms - particularly those that make packaged goods - to turn to “nearshoring”, or producing goods closer to where they’re sold.