BBVA is suffering on the stock market due to the harsh trade policy announced by Donald Trump. The president-elect of the United States has confirmed his intention to impose duties of 10% on imports from China and 25% on those coming from Canada and Mexico, the latter country towards which the entity chaired by Carlos Torres has a strong exposure.
XTB analysts estimate that this tariff policy would “cause serious damage to Mexico’s auto sector and to factories in the country’s central and northern states that export electronics, plastics and other manufactured goods to American consumers.”
As the main trading partner of the United States, the threat is dangerous for the country’s activity, as was also reflected in the performance of the Mexican peso, which fell by almost 1.8% at the worst moments of the day, trading at the lowest level since 2022 against the dollar.
This situation damages BBVA, which, according to its latest quarterly results, makes more than 50% of its profits in Mexico because, as analysts indicate, “the volatility of the currency and the economic consequences that it could generate in the country, these tariffs will lead to have direct implications on the company’s income.
In this context, its stock collapsed this Tuesday by 3.31% on the Spanish stock exchange to 8.94 euros per share, the second worst value of the Ibex, behind only ArcelorMittal (-3.81%), but the bank more bearish after the declines of 2.8% in Sabadell, 1.9% in Unicaja or the 1% that CaixaBank and Santander left at the close of the session.
In fact, all European stock exchanges closed with losses burdened by banks in the face of this tariff threat, with a decline of 0.8% for the Ibex-35, which still managed to save 11,600 points.
It’s not just Mexico. The industry as a whole is also starting to notice uncertainty regarding the economic impact that Trump’s protectionist policy could have on Europe. They know that the greater the tension, the greater the danger to economic growth, which could favor more aggressive interest rate cuts than expected by the European Central Bank (ECB). Something that damages the margins of the sector.
What are the potential impacts of Trump’s tariffs on BBVA’s performance in the Mexican market?
Interview: Time.news Editor Meets XTB Analyst
Time.news Editor: Good afternoon, and welcome to our segment where we dive deep into current events affecting the financial landscape. Today, we’re focusing on BBVA and the implications of recent trade policies announced by Donald Trump. Joining us is a leading analyst from XTB, who brings valuable insights into this topic. Thank you for being here!
XTB Analyst: Thank you for having me. It’s an important topic, and I’m glad to discuss it.
Editor: Let’s start with the impact of Trump’s proposed tariffs. He’s signaling a 10% duty on imports from China and 25% on goods coming from Canada and Mexico. How do you see these tariffs affecting BBVA specifically?
Analyst: BBVA is particularly vulnerable because it has significant exposure to the Mexican market. With these tariffs, there is potential for a drastic slowdown in trade, which could lead to economic instability in Mexico. As a major financial institution operating there, BBVA could see its profits declining due to a less robust market.
Editor: You mentioned Mexico’s auto sector and manufacturing industries could suffer severely. Can you elaborate on how these sectors are linked to BBVA’s performance?
Analyst: Absolutely. The auto industry and other manufacturers in central and northern Mexico are heavily reliant on exports to the US. If tariff barriers inflate costs or reduce sales volumes, we could see factory closures, job losses, and decreased consumer spending. This would all directly impact BBVA’s loan portfolios and overall financial health in the region.
Editor: What are analysts like you predicting in terms of BBVA’s stock market performance if these tariffs go into effect?
Analyst: We anticipate that BBVA’s stock may continue to struggle. Investors are already reacting negatively to the uncertainty surrounding these trade policies. If tariffs are implemented as proposed and we start to see detrimental effects on the Mexican economy, it could reinforce pessimism around the bank’s stock price.
Editor: In terms of broader implications, what might this mean for US-Mexico trade relations? Are there long-term ramifications to consider?
Analyst: Yes, definitely. If the US follows through with these tariffs, it might not only strain relations but could provoke retaliatory measures from Mexico. This could lead to a trade war, and the economic consequences could reach far beyond just the banking sector. Trade agreements and economic ties that have developed over decades could unwind, leading to a more isolated and less stable economy in North America.
Editor: So what do you think BBVA can do to mitigate these risks? Are there strategies they could employ?
Analyst: It will be crucial for BBVA to diversify its operations and reduce dependence on the Mexican market. Expanding into other markets, streamlining costs, and strengthening their risk management practices could help cushion the impact. Furthermore, proactive engagement with policymakers to advocate for constructive trade relationships could also position them favorably.
Editor: Thank you for those insights. how should investors approach BBVA at this time?
Analyst: Caution is essential. Investors should closely monitor the unfolding trade negotiations and consider the bank’s exposure to vulnerable sectors. A thorough analysis of market conditions, as well as vigilance for any changes in the geopolitical landscape, will be key for making informed investment decisions moving forward.
Editor: Thank you for your insights today. It’s clear that the interplay between trade policy and financial markets is complex and evolving. We appreciate your expertise on the matter.
Analyst: Thank you for having me. It’s important to stay informed as these developments unfold.
Editor: And thank you to our viewers for tuning in. Stay with us for more updates on finance and global news.