Executive Briefings

Trump's Threats to Booming Mexico Auto Industry Worry Executives

It was supposed to be a victory party. Carmakers from across the globe had planned to celebrate their head-spinning boom in Mexico at the Automotive Logistics conference held in Mexico City last week. Then Donald Trump won the U.S. presidential election.

In the span of weeks, Trump has issued threats and hints at trade policies that could jeopardize two decades of growth for Mexico's auto manufacturing sector.

It started with Trump's tweets that attacked Ford and General Motors for building and exporting small cars from Mexico to the U.S. Once in office, Trump issued an executive order Jan. 25 calling for a wall to be built at the southern border, and the president's press secretary followed up by floating the idea of a 20-percent tax on Mexican imports to pay for it.

None of those moves bode well for companies that have sunk billions over the last five years into building new factories that now dot Mexican cities from the capital to the U.S. border. Mexico produced 3.5 million light vehicles in 2016, up 67 percent from 2.1 million in 2008, according to the Mexican Automotive Industry Assn.

The country has become the fourth-largest car exporter in the world, after Germany, Japan and South Korea.

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In the span of weeks, Trump has issued threats and hints at trade policies that could jeopardize two decades of growth for Mexico's auto manufacturing sector.

It started with Trump's tweets that attacked Ford and General Motors for building and exporting small cars from Mexico to the U.S. Once in office, Trump issued an executive order Jan. 25 calling for a wall to be built at the southern border, and the president's press secretary followed up by floating the idea of a 20-percent tax on Mexican imports to pay for it.

None of those moves bode well for companies that have sunk billions over the last five years into building new factories that now dot Mexican cities from the capital to the U.S. border. Mexico produced 3.5 million light vehicles in 2016, up 67 percent from 2.1 million in 2008, according to the Mexican Automotive Industry Assn.

The country has become the fourth-largest car exporter in the world, after Germany, Japan and South Korea.

Read Full Article