Investing.com - Chipotle shares fell on Monday on fears proposed tariffs on the fast-food chain could ramp up costs by millions of dollars and eat into margins.
If the tariffs on all Mexican exports suggested by Trump are enacted, the restaurant chain's costs could go up by about $15 million this year and reduce its margins by 20-30 basis points, Chief Financial Officer Jack Hartung said in an e-mailed statement to Reuters.
Trump said last week the U.S. will impose, starting June 10, a 5% tariff on all imported goods from Mexico that would "gradually increase until the illegal immigration problem is remedied."
As well as the proposed tariffs, higher labor costs and a rise in avocado prices following a poor harvest in Mexico are also threatening to send costs higher.
Mexico, the largest supplier of agricultural produce to the United States, exported more than $8 billion worth of avocados and other vegetables to the U.S. last year.
Still, Chipotle added it could offset increased costs by charging 5 cents more per burrito.
Chipotle (NYSE:CMG) fell 2.2%, but is still about 50% higher so far this year.