As Donald Trump vows an expanded trade war, businesses in Mexico are continuing with factory expansions. They assume their country remains central to America’s goal to get less dependent on China.
Like much of the Mexican business world, Daniel Córdova finds himself grappling with an enormous variable looming across the US border: the imminent return of Donald Trump to the White House.
Hanging in the balance is the pace of investment and job growth in Mexico, along with the availability of a vast profusion of imported goods in the US — from fresh fruits and vegetables to car parts.At the Trane factory in the industrial enclave of Apodaca, Córdova is getting ready. If the tariffs materialise, the company could shift orders to its American factories.
For now, uncertainty reigns. Mazda, a Japanese car maker, is holding off on future investments in Mexico until Trump’s plans take shape. Honda has told investors that tariffs on Mexican-made vehicles could force it to consider shifting production elsewhere. On a recent evening, Emmanuel Loo, Nuevo Leon’s economy secretary, held court at an outdoor restaurant, serving tacos to a pair of consultants — one a former executive at Intel, the American computer chip manufacturer. Loo had retained them to attract investment that could make the state a hub for the semiconductor industry.
In recent years, Chinese companies have constructed factories in Mexico, making use of a North American free-trade pact to gain access to the US market. So long as they satisfy so-called rules of origin — requirements that certain percentages of parts and raw materials are drawn from North American suppliers — their products are treated as Mexican made. They qualify for duty-free access into the US.
Daniel Córdova, who oversees a Trane factory that makes air conditioning units for the American company, at the plant outside Monterrey.The terms of the North American bloc were negotiated by Trump, who called it “the largest, most significant, modern and balanced trade agreement in history.” If Trump imposes indiscriminate tariffs on Mexican exports, he will effectively be renouncing his own deal, Santos said.
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