Trump’s Ford deal dashes Mexican villagers’ dreams

1/20/2017 Forbes 

Donald_Trump_August_19,_2015_(cropped)The arid desert landscape of Villa de Reyes is a world away from the glitz of the presidential inauguration on Capitol Hill.

Yet since Donald Trump was elected, the sparsely populated communities and dry valleys of Central Mexico have been inexorably linked to events in Washington DC.

Like so much with President-elect Trump, it began with a tweet.

“Make in U.S.A. or pay big border tax!” he tweeted at General Motors earlier this month.

The warning may have been aimed at GM but within hours, Ford, which had also been singled out for criticism during his campaign announced that it was withdrawing from a $1.6bn (£1.3bn) car assembly plant in Villa de Reyes.

Some of that money would be reinvested in Michigan in what the CEO of Ford described to the BBC as “a vote of confidence” in Mr Trump’s business policies.

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Fed’s Kaplan Says Immigration, Mexican Trade Make U.S. Stronger

1/18/2017 Bloomberg Markets

US dollarsFederal Reserve Bank of Dallas President Robert Kaplan said trade with Mexico protects U.S. jobs and immigration is key to the country’s long-term health, contradicting public positions taken by Donald Trump without directly naming the president-elect.

In remarks Wednesday to an audience in Dallas, Kaplan, a Fed policy voter in 2017, spelled out why their southern neighbor was already deeply integrated within the U.S. economy.

“Of the imports from Mexico to the United States, 40 percent of the content is U.S. content. These are production partnerships, integrated supply chains and logistics,” said the former Goldman Sachs Group Inc. executive. “These relationships have increased jobs not only in Texas but in the country, and improved U.S. competitiveness. If we didn’t have this relationship, these jobs would likely be lost.”

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Trump’s strategy on Mexico could be ‘dagger at Ohio’

1/18/2017 Associated Press

Trump Peace

DAVOS, Switzerland (AP) — President-elect Donald Trump’s threats to firms using Mexico as a manufacturing base will be counterproductive and could eventually cost thousands of American jobs, Lawrence Summers, the former U.S. Treasury Secretary, warned Wednesday.

Summers noted that Trump’s “rhetoric and announced policies” over Mexico have led to a big fall in the value of the Mexican peso against the dollar. The peso has fallen almost 20 percent against the dollar to a record low since Trump’s victory in November. That makes it even cheaper to invest in Mexico and export goods from there.

“That decline in the peso is a dagger at Ohio; it is a major change in the relative attractiveness of locating production activity in Mexico versus locating it in the American heartland,” Summers told a panel at the World Economic Forum in Davos, Switzerland.

“And the consequence of that is measured not in the dozens or hundreds but in the thousands, or ten thousands or even hundreds of thousands of jobs.”

The lesson of history, he added, is that “classic populism is invariably counterproductive for those in whose name it is offered as a policy regime.”

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The View from Mexico | Border Adjustment Tax: Economic Impact & WTO Consistency

1/18/2017 Forbes.com, Mexico Institute Blog

By Luis de la Calle

Donald Trump has been elected U.S. President as disrupter in chief; somebody that can get things done and change the status quo.

One of the centerpieces of his program appears to be a complete revamp of the U.S. tax system. “I understand the tax laws better than almost anyone. And that is why I am one that can truly fix them,” he said several times in debates and rallies. The idea is to end up with a system that favors investment on infrastructure and capital goods.

His background as a developer and his penchant for not paying taxes have led him to believe that the best way to promote growth and generate government revenue is taxing consumption rather than investment. Furthermore, his infrastructure ambitions need significant private investment funds that might only come with a favorable regime. The idea is to prompt firms and banks holding more than a trillion dollars in cash to put it to work.

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General Motors CEO Mary Barra Says Donald Trump’s Threats Won’t Change the Company’s Plans

1/17/2017 Fortune
gmMary Barra, the CEO of General Motors, isn’t letting Donald Trump change her company’s plans.

Speaking to reporters at a GM event in Detroit, Barra said GM’s small-car production will stay in Mexico, since manufacturing and plant investments are not easily changed, the Wall Street Journal reports. “This is a long-lead business with highly capital-intensive investments—decisions that were made two, three and four years ago,” Barra said.

Barra’s comments come after the President-elect threatened the company with a “big border tax” for importing some Chevrolet Cruze compact cars from a plant in Mexico. But those models represent less than 5% of the Cruze cars sold in the U.S. The rest are manufactured at GM’s Lordstown, Ohio, factory.

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Corona has a Trump-Mexico problem

1/17/2017 CNN Money

Photo by Flikr user LyfetimeCorona is going through a serious Trump hangover. Just one day after Donald Trump was elected president, the U.S. company that distributes Corona took a 7% dive in the stock market — and it hasn’t recovered.

Constellation Brands’ stock remains down 10% since the election, seriously missing out on Wall Street’s big Trump rally. The post-election slump is largely driven by fears that Trump’s aggressive stance towards Mexico will ricochet against Constellation’s portfolio of Mexican beer brands Corona, Modelo and Pacifico.

Constellation (STZ) is the largest imported beer company in the U.S., so it makes sense that shareholders are concerned about Trump’s threats to tear up NAFTA, slap big tariffs on Mexican imports or install a “border tax.”

Trump’s immigration rhetoric or policies could also hurt the beer company’s customer base. Constellation could lose 1.5 million to 2 million consumers if undocumented workers voluntarily leave the U.S. due to heightened enforcement fears, Evercore ISI analyst Robert Ottenstein estimates.

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German Automakers Push Back Trump’s Warning Over Mexican Plants

1/16/2017 Bloomberg

Washauto06_bmw_325_AudeVivereGerman carmakers pushed back Donald Trump’s threats of import duties on the autos they make in Mexico, pointing to extensive production expansion in the U.S. in recent years.

BMW AG, which the president-elect singled out in an interview with German newspaper Bild on Sunday, sought to defuse potential tensions by stating that its largest factory is in South Carolina and that cars made at a planned, smaller factory in Mexico will be exported globally. Trump said BMW will face a 35 percent import duty on vehicles it exports to the U.S. from Mexico.

“We take the comments seriously, but it remains to be seen if and how the announcements will be implemented by the U.S. administration,” Matthias Wissmann, president of German auto industry association VDA, said in an e-mailed statement. The U.S. Congress will probably show “substantial resistance” against the duty proposals, he said.

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