Companies are wary of new investment in Mexico until Trump policies clarified

Donald Trump’s threats to battle Mexico over trade, investment and jobs have pushed a growing number of companies operating in the country to put expansion plans on hold until the president-elect fleshes out his policies, business leaders have told Reuters since the Nov. 8 election.

Pledging to recast a joint trade deal and protect U.S. industry from outsourcing to Mexico, Trump landed his first blow last week, announcing a deal with United Technologies Corp’s Carrier unit to stop it shifting about 1,000 jobs south of the border.

Trump’s unorthodox move, involving state tax breaks, sent a chill through executives still uncertain which policies the president-elect would pursue upon assuming office on Jan. 20. On the campaign trail, he threatened to levy hefty tariffs on Chinese and Mexican-made products.

“If he puts an import duty on Mexican goods, it’s going to be a total disaster,” said Maurizio Rosa, chief executive of Codan Rubber Mexico, a maker of hoses for the auto industry with annual sales of some 200 million pesos ($10 million USD).

Codan and other companies in Mexico are plugged into the 1994 North American Free Trade Agreement (NAFTA) between the United States, Mexico and Canada, which Trump has threatened to dismantle if he cannot renegotiate it.

Over half of Codan’s output goes directly to the United States, and “probably the rest” indirectly through other firms, said Rosa, whose clients include automakers Nissan Motor Co Ltd, Volkswagen AG (VOWG_p.DE) and tractor maker Kubota Corp.

Until it becomes clear what Trump means for business, new investment at the firm has been put on hold, he said.

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Source: reuters.com