Mexico, Betting Trump Is Bluffing on Tariffs, Sees an Opportunity
The New York Times
Business leaders in Mexico say the incoming U.S. administration will enhance the appeal of their factories as an alternative to plants in China.
Like much of the Mexican business world, Daniel Córdova finds himself grappling with an enormous variable looming across the American border: the imminent return of Donald J. Trump to the White House.
Mr. Córdova oversees a factory outside the city of Monterrey that makes heating and air-conditioning units for Trane, an American company. The last time Mr. Trump was president, he unleashed a trade war against China that proved beneficial to Mexican industry. Companies that relied on Chinese factories to make goods for the American market shifted production to plants in Mexico to avoid Mr. Trump’s tariffs.
That trend, known as “nearshoring,” gained momentum as President Biden extended tariffs on Chinese imports. Soaring shipping prices during the pandemic heightened the pitfalls of relying on factories across oceans. For companies seeking to close the distance between plants in Asia and customers in the United States, Mexico beckoned as an attractive place to manufacture their wares.
Then last month, President-elect Trump threatened the economics of nearshoring by promising to impose 25 percent tariffs on all goods entering the United States from Mexico and Canada. Mexican industry was confronted with a high-stakes question: Was Mr. Trump bluffing, hoping the threat would pressure the Mexican government to halt the movement of people and drugs toward the border? Or was he really preparing to put tariffs on Mexican imports to force companies to move production to the United States?
