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Trump Threatens Tariffs on Imports of Vehicles Assembled in Mexico

LADB Article ID: 80177
Category/Department: Mexico
Date: 2017-01-11
By: Carlos Navarro

US President-elect Donald Trump is casting a long shadow on the Mexican automotive sector even before taking office. Using social media, primarily Twitter, Trump has threatened US and international automakers with economic sanctions if they proceeded with plans to construct or expand facilities in Mexico to assemble vehicles for export to the US. Trump tweeted the messages threatening to impose steep tariffs in late December and early January. Most, if not all, of the automakers had already anticipated pressure from the president-elect shortly after Trump won the vote in November. At that time, US and foreign manufacturers offered reassurances that the cost of production, due to lower labor costs, was sufficient to overcome Trump’s threats to impose tariffs as high as 35% on imports of motor vehicles assembled in Mexico.The president-elect’s threats had the most tangible impact on US automaker Ford’s operations in Mexico. On Jan. 2, Ford announced the cancellation of plans to construct a US$1.6 billion assembly plant in the community of Villa de Reyes in San Luis Potosí state. Trump also sent Twitter messages threatening economic sanctions for General Motors and Toyota if they moved forward with projects in Mexico.

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