Trump effect: Ford cancels Mexico plant

Ford Motor Co. has decided to cancel its plans of building a $ 1.6 billion production plant in Mexico. Instead, the company will now be investing $ 700 million to expand the capacity of its existing factory in Michigan, USA.

This announcement comes after US President-elect - Donald Trump - constantly criticised Ford's decision to invest in Mexico. During his presidential election campaign, Trump repeatedly stressed that, if elected, he won't allow Ford to build its planned Mexico plant. He also recently indicated that the elected government will impose a hefty Border Tax on cars that are imported into the US from Mexico. In the current scenario, no tax is levied on products that are imported from Mexico to the United States thanks to a trade agreement between the two countries.

Ford officials claim that the decision has been taken due to declining demand for Ford's popular models, including the Focus and the Fusion. The automaker is thus trying to fully utilise the capacity of existing plants, before making any bigger investments on all-new facilities. Ford will be building new electric, hybrid and autonomous vehicles at its Michigan factory. The increase in capacity of the Michigan plant will also introduce 700 new jobs in the country.

General Motors, another US-based automaker, appears to be the next manufacturer on Trump's radar, as the President-elect recently tweeted - "General Motors is sending Mexican made model of Chevy Cruze to U.S. car dealers-tax free across border. Make in U.S.A. or pay big border tax!"

Source: ET Auto