Nikkei tumbles to 3-month low as carmakers plunge on Trump's Mexico tariff

* Auto sector second worst performer on the board
* Japan Display soars on news it will get financial aid

By Ayai Tomisawa
TOKYO, May 31 (Reuters) - Japan's Nikkei tumbled to a more
than three-month low, led by a plunge in carmakers after U.S.
President Donald Trump said the United States would impose a new
tariff on all imports from Mexico next month until illegal
immigration is stopped.
The Nikkei share average .N225 fell 0.7% to 20,795.63 in
midmorning trade, after sinking to as low as 20,672.29 earlier
in the session, the lowest since mid-February.
The transport equipment sector .ITEQP.T tumbled 2.4% and
was the second worst sectoral performer on the board. Mazda
Motor Corp 7261.T dived 6.4%, Toyota Motor Co 7203.T shed
2.3%, Nissan Motor Co 7201.T plunged 3.1% and Honda Motor Co
7267.T declined 3.2%.
Trump said on Thursday the U.S. will impose a 5% tariff on
all goods coming from Mexico starting on June 10 until illegal
immigration across the southern border is stopped. "The Tariff will gradually increase until the Illegal
Immigration problem is remedied, at which time the Tariffs will
be removed," Trump said on Twitter.
In a statement issued by the White House, Trump said the
tariff would increase to 10% on July 1, 15% on Aug. 1, 20% on
Sept. 1 and to 25% on Oct. 1.
"It doesn't look like there are prospects of resolving the
immigration issue by the deadline. Although the specific impact
on the Japanese auto industry is unclear at this point,
investors are growing increasingly worried about a negative
effect on auto sales," said Yoshinori Shigemi, a global market
strategist at JPMorgan Asset Management.
"The immigration issue itself is contained between the U.S.
and Mexico, but Trump's latest move reminded investors about his
hardline stance on trade issues so the market is cautious about
a trade deal between the U.S. and Japan as well."
Trump had indicated during his Japan trip this week that
there will be trade announcements between the two sides
"probably in August," and that the trade gap between the two
countries could be "straightened out rapidly." Bucking the weak trend, Japan Display Inc 6740.T jumped as
much as 36% after news it secured a financial aid from a
Chinese-Taiwanese consortium in June. Ono Pharmaceutical 4528.T soared 3.9% after the company
said it will buy back up to 2.92% of its own shares, worth up to
30 billion yen. The broader Topix index .TOPX was weaker with all but two
of its 33 subsectors in the red.

(Editing by Sam Holmes)