The launch of Mexico towards companies that considered the American market was simple. Worried about vulnerable supply chains? Do you need to reduce your dependence on China? Do you want an economic point close to the United States with favorable commercial rules? Try Mexico.
Thousands of companies, from family businesses to electric brands, Asia, Europe and elsewhere, have done this in recent years. Adidas, Samsung, Honda, Hyundai, Nestlé, Volkswagen, Volvo, Lego and other industrial parks of Crowd Mexico.
That parade grew following nightmares of the supply chain related to pandemic and growing political tensions between the United States and China. Canada – a key partner in the North American production network – also benefited. Last year, Honda announced the intention to invest about $ 11 billion in new electric vehicles production systems and batteries in Ontario, together with its existing structures. Toyota and Volvo also have plants in Canada.
But now, the threat of President Trump to impose a 25 % rate on all imports from Mexico and Canada already hit companies such as a fucking ice storm in the summer.
“If you are an investment officer sitting in a c–monite, how do you decide where will you put money?” Mary E. Lovely asked, a senior member of the Peterson Institute for International Economics in Washington.
President Trump himself signed a new commercial pact with Mexico and Canada in 2020 during his first term. Now, in fact, that contract is tearing.
It is disorienting for any company, said Mrs. Lovely, because commercial agreements have the purpose of creating “safe spaces” for long -term investments.
Trump also said that he would import new rates of 10 % on all imports from China starting from Saturday.
So far, other Asian and European commercial partners have escaped the first round of deadlines of the presidential trade.
Yet they still have to prepare for the unexpected repercussions of the rates slapped on Mexico and Canada.
Only Japan has more than 1,300 companies operating in Mexico, with more than half of them in the manufacturing sector. Some are automotive suppliers who moved production from China during Mr. Trump’s first term, when he started a commercial war with Beijing. In November, the Japanese Toyota said he would hit other $ 1.45 billion in his two Mexican plants.
Other factories are coming. In October, the Taiwan Foxconn electronics giant announced the intention to build a mega-facterium in Mexico to produce nvidia chips.
“It is ironic, because there has been such a response to the first rates to renovate the supply chains, and now you are practically punishing the countries that have benefited from this adjustment,” said Albert Park, an economist’s head of Asia -Development Bank.
At Honda, a manager said there was a feeling of disbelief when Trump warned rates on goods not only from Mexico, where Honda manages an automotive system in Celaya, but also from Canada.
Mexico is the largest exporter of car parts in the United States. For example Honda produces around 200,000 vehicles in Mexico and sends around 160,000 of those to the United States. The American car manufacturers such as General Motors and Ford Motor, who have large plants in Mexico and Canada, would be affected by the rates in the same way.
In a press conference in November, the executive vice -president of Honda, Shinji Aoyama, said that long -term rates would be discouraged. “Can companies actually stop producing in Mexico?” he asked. “It’s really difficult to do.“
Mexico also hosts other main producers that produce aerospace equipment, electronics, appliances and more. He is the largest exporter of medical devices in the United States.
Hundreds of Chinese companies, including the producer of Electronics Lenovo and the Chery car manufacturer, are also migrated to Mexico in the hope of evading the rates. Byd, the main Chinese electric vehicle company, has explored a production site in the country.
All these activities-Asia from Asia, from Europe that from the United States, should also compete with any duties added on the components that import from China, which remains the reference source of many parts, tools and equipment.
Trump has said that the most recent tariff threats aim to help stop the flow of migrants and Fenestanils. A longer term goal, however, is to press pressure on companies to build multiple plants not only close to the American coast but on them.
“Come and do your product in America,” Trump said in a television speech at the World Economic Forum this month. Otherwise, “then very simply you will simply have to pay a rate”.
Many companies have already done it. Some were in response to the threatened rates; Others to change the commercial models.
Last year, Reckitt, a British company, mentioned the shipping logjam for his decision to move a certain production of Mucinex-his best-selling bench medicine in the United States-North Carolina from Mexico and Great Britain . After the pandemic interrupted the cold and the flu and led to low supplies, the company wanted to make sure that Mucinex could get on the shelves of the stores faster.
Denmark LEGO, the largest toy in the world, has its largest factory site in Mexico. In 2022 he announced his intention to build a structure in Virginia. The reason, said LEGO, was to shorten its supply chain and approach the transport centers of the eastern coast.
In 2017, Toyota committed himself to investing $ 10 billion in US production for five years, shortly after President Trump, during his first term, threatened to issue rates against the company. Toyota is building a battery production structure in the North Carolina and in 2021 it opened a vehicle system in Alabama operating with Mazda.
The latest threats of Mr. Trump are once again pushing companies to consider their options. Among these are two giants of South Korean electronics.
LG Electronics and Samsung Electronics are both taking into consideration the possibility of moving part of their production of household appliances in the United States, according to local media. (The spokesmen of both companies refused to comment.)
Mazda, who sends about 70 percent of the vehicles that creates in Mexico in the United States, said that it could move part of that production in the Alabama plant that runs jointly with Toyota.
For many companies, however, moving a large piece of production to the United States is not unrealistic, said Agathe Demarais, senior policy of the European Council for foreign relations.
The costs are too high. American workers are not willing to accept the low wages that initially pushed companies to move to countries like Mexico.
Mazda and Toyota have already fought to increase production in their united US factory due to the lack of workers.
In these days, Mrs. Demarais said, large companies could do their best to stay under the radar and wait for Trump’s mandate. The opening of an important production system requires billions of dollars and a lot of time.
And corporate leaders can be wary of investing in the United States when politics is so unpredictable. Last week, for example, the president unexpectedly increased the possibility of doubled taxes on foreign citizens and companies.
Even more important, said Mrs. Demarais, is that companies recognize that global trade is increasingly organized around commercial routes that reflect the growing rivalry between the United States and China, such as the regional one that involves Mexico and Canada.
“This is a structural trend that will survive Trump,” he said.
Meaghan Tobin Reports contributed by Taipei, Taiwan.