Scuttled Ford plant has Mexico fearing more under Trump
MEXICO CITY — Ford Motor Co.’s cancellation of plans to build a $1.6 billion auto manufacturing plant in San Luis Potosi has sounded alarms across Mexico.
Even as the country was being rocked by rowdy nationwide protests against a Jan. 1 gasoline price hike, the Ford news led the front pages of Mexico’s most influential newspapers last week, and they tied the development directly to Presidentelect Donald Trump.
“Trump leaves Mexico without 3,600 jobs,” read the headline on El Universal. “Ford’s braking jolts the peso,” said Reforma, referring to the Mexican currency’s nearly 1 percent slump following the news.
“The jobs created in Mexico have contributed to maintaining manufacturing jobs in the United States which otherwise would have disappeared in the face of Asian competition,” the Mexico Economy Department said.
Amid all this, Mexican President Enrique Pena Nieto appointed a former finance minister described by Mr. Trump as a “wonderful man” as Mexico’s foreign minister last week as he prepares for the change of command in Washington.
Luis Videgaray resigned as finance minister in September after helping to arrange a visit by Mr. Trump, which precipitated public outrage with Mr. Pena Nieto. After his resignation, Mr. Trump took to Twitter to praise Mr. Videgaray, saying “Mexico and the United States would have made wonderful deals together” if he had remained in office.
The new top diplomat will have his work cut out for him.
Mexicans have been nervous about Mr. Trump’s tough rhetoric toward their country, including disparaging remarks about immigrants who enter the U.S. illegally and vows to wall off the border and renegotiate the North American Free Trade Agreement, upsetting ties with what is by far Mexico’s largest trading partner. NAFTA has been seen as making Mexico an export powerhouse.
Two weeks before inauguration, the scuttling of the planned Ford factory and Mr. Trump’s pressure on General Motors should be a “muchneeded wake-up call,” said Mexico analyst Alejandro Hope.
It shows “how much actual leverage Trump has within specific companies, which is far greater than what Mexican elites thought until recently,” Mr. Hope said. “They claimed that at the end of the day economic interests would prevail over political messaging. That’s clearly not the case.”
In an editorial, El Universal also recalled the deal Mr. Trump struck in December with Carrier to keep 800 of 1,300 jobs at an Indiana furnace factory from being sent to Mexico, in return for millions of dollars in tax incentives. It also implicitly criticized the Mexican government’s response to the incoming administration.
“Mexico loses thousands of jobs with no word on a clear strategy for confronting the next U.S. government which has presented itself as protectionist and, especially, antiMexican,” the paper wrote. “Trump will try to recover as many U.S. companies that have set up in Mexico as possible. He will try to make them return at whatever cost, through threats or using public resources.”
“Ford’s decision is indicative of what awaits the economies of both countries,” the daily La Jornada said. “For ours a severe decrease in investment from our neighboring country, and for the U.S. a notable increase in their production costs.”
Mr. Hope said more decisions like Ford’s are likely to come. And while the loss of a single planned plant probably does not fundamentally change the U.S.-Mexico economic relationship, “it certainly shows that the idea that the status quo was entrenched was false.”
“This should put us on notice that when he says that he wants to renegotiate NAFTA, he means it,” Mr. Hope said.
Meanwhile, Republicans in Congress are beginning the search to find money to help Mr. Trump fulfill one of his biggest campaign promises: to build a wall along the Mexican border to slow illegal immigration.
Mr. Trump is expected to ask Congress to provide the initial funding for the project, estimated to cost between $12 billion and $38 billion.
Once construction begins, Mr. Trump has said, he will demand reimbursement from the Mexican government, even though Mexican officials have said they won’t pay.
Mr. Trump promised Friday that he would force Mexico to fund the wall.
“The dishonest media does not report that any money spent on building the Great Wall [for sake of speed], will be paid back by Mexico later!” he posted on Twitter.
Former Mexican President Vicente Fox responded: “Trump may ask whoever he wants, but still neither myself nor Mexico are going to pay for his racist monument. Another promise he can’t keep.”
Republicans Friday were trying to figure out how to provide initial support for the wall, despite opposition from Democrats and resistance from budget conservatives in their own party.
“I’m not sure anyone believed the government of Mexico was going to write a giant check to the federal registry, but there are other ways to ensure Mexico does pay for the border buildout,” said Rep. Luke Messer, RInd., chairman of the Republican Policy Committee. “There are broad conversations about fulfilling all of Mr. Trump’s campaign promises.”
During the campaign, Mr. Trump suggested that if Mexico did not agree to pay for the wall, the U.S. might impose a fee on financial remittances sent home by Mexicans working in the U.S. illegally. Such action would surely be opposed by the financial services industry.
The president-elect has also suggested the U.S. could try to pressure Mexico by reducing or slowing the process through which Mexicans get travel cards and visitors’ visas.
U.S. Customs and Border Protection, parent agency of the Border Patrol, has budgeted $175 million for “procurement, construction and improvements.” But even if that money is diverted to the wall, it wouldn’t be nearly enough.