The auto industry will be negatively affected by President Donald Trump’s threat to impose tariffs on goods produced in Mexico until that country’s government stops the flow of migrants illegally crossing its border with the US, RBC Capital Markets said Friday.

Late Thursday, the president said he would invoke his powers under the International Emergency Economic Powers Act to impose a 5% tariff on all products imported from Mexico starting on June 10. The rate would increase to 10% on July 1, 15% on Aug. 1, 20% on Sept. 1 and remain at 25% on Oct. 1 “until Mexico substantially stops the illegal inflow of aliens coming through its territory,” Trump said in a statement.

Mexican President Andres Manuel Lopez Obrador said in a public letter later Thursday evening that “social problems are not solved with duties or coercive measures,” the Associated Press reported. Obrador added he would send the country’s foreign relations secretary to Washington on Friday to discuss the issue, the report said.

RBC analysts led by Joseph Spak said approximately 10% of Ford’s (F) and 28% of General Motors’ (GM) North American production comes from Mexico. They highlighted that some full-size GM pickups models are produced in that country and those vehicles manufactured in the US have higher content manufactured in Mexico.

“Vehicle content also matters,” the analysts said. “This is particularly difficult because parts can cross borders multiple times before the vehicle ends up on a dealer’s lot.”

RBC said about 25% of the content in Tesla (TSLA) vehicles is made in Mexico.

Suppliers to automakers with production facilities in Mexico are likely to be impacted since they usually have operations near those plants because the size of the components they manufacture makes shipping difficult, the analyst said. Those products are then sent to the plant in Mexico for finally assembly before the finished vehicle is shipped across the border.

“However, labor-intensive businesses like wire harnesses, fabrics tends to have more Mexico exposure because of the wage arbitrage and will ship to the US,” RBC said. “So what really matters is gross exposure from Mexico to the US.”

Polaris Industries (PII) is facing a two-sided hit, the analysts said, because it was facing tariffs on the parts it was importing from China. RBC said Polaris’s chief executive stated recently that he would have to move production from China to Mexico if that trade dispute wasn’t resolved.

“But, now they may be hit either way (though the Mexico parts would put them on more level playing field with competitors,” the analysts said.

In early trading, GM was down nearly 3.7% while Ford was 2.7% lower. Meanwhile, Polaris was 1.4% lower and Tesla slipped 1%.

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