Currently, Mexico is the world’s fourth car exporting country. However, there are fears that Donald Trump’s presidency could bring this to an end. This is as a result of his plans to renegotiate the North American free trade agreement (NAFTA) between the United States, Mexico, and Canada.
The real picture in Mexico
Over the Mexico desert in the outskirts of the Mexican state of San Luis Potosi, skeletal remains of a partly constructed Ford vehicle manufacturing plant are evident. To those living in the small Mexican towns nearby, this plant remains a constant reminder of the failed economic promise.
Mexican residents had great hopes when they heard about the Ford vehicle manufacturing plant. They saw jobs money and investment. According to them, this was a great opportunity. However, their hopes were short-lived since Ford decided to discard the whole idea overnight. This has had an adverse effect especially to Mexicans who hoped to work in this plant.
Causes of the cancellation
In January, Ford clearly announced that it was canceling its plans to spend $ 1.6 billion in building the car manufacturing plant in central Mexico. Mark Fields who was the company’s chief executive officer said that Ford had come up with such a decision as a result of the declining sales of small cars that the company intended to build at the plant
It is alleged that Trump could also have affected this due to his expression of anger at car companies such as Toyota and GM for using Mexican vehicle manufacturing plants to build cars sold in the United States. As a result of the same, President Donald Trump has called for the renegotiation of the free trade agreement. President Trump has blamed NAFTA for the loss of jobs in the United States.
Some Mexican residents blame President Trump for this since he said that when he became president he would take such opportunities away from Mexico.
The impact of car making in Mexico
The car sector in Mexico makes up to 6% of its gross domestic product and 25 % of exports. Over a period of the last 20 years, Mexico has risen all the way from an insular economy to the fourth largest car exporting company on the planet. – Behind Germany Japan and South Korea. With such flourish of the vehicle manufacturing industry, almost every car maker has stationed themselves in Mexico.
Companies like BMW, General Motors and Nissan have not only been attracted by the NAFTA deal. The position of Mexico in the US border, its deal with 45 countries and its access to both the Pacific and Atlantic oceans makes this country the perfecting trading hub for car manufacturers. Despite this, however, the changes in the NAFTA would still be a big blow since Mexico exported 77% of the vehicles it made last to the United States.
Effects of renegotiating the deal
As a result of the predicted renegotiation of the free trade deal, many Mexicans could be adversely affected despite them living miles away from DC. This is because the decisions coming from the US have a direct impact on its neighbors. Much as the whole car industry may not be crumbling down in Mexico the uncertainty is casting a show of unpredicted doom on the Mexican residents who rely on the car manufacturing sector.