Throughout his presidential campaign, Donald Trump berated the bosses of U.S. automaker Ford for their plans to build a new assembly plant in Mexico, thus moving valuable U.S. jobs south of the border.
His reprimands appeared to be falling on deaf ears, as Ford’s directors assured government officials in the state of San Luis Potosi that the project – three years in the planning – was still on track.
This week, Ford announced that it was cancelling construction of the $US1.6 billion plant, a move that caused the Mexican peso to fall to a new record low of 21.624 to the US dollar.
Ford announced that market forces and not bullying by Trump – who has repeatedly threatened to slap tariffs on all cars imported into the United States – was the major reason for cancelling the San Luis Potosi plant. Nonetheless, the decision not only sent shock waves through Mexico’s financial markets but appeared to force President Enrique Peña Nieto into making adjustments to his cabinet in an attempt to better deal with a protectionist president in the White House.
His first move this week was to appoint a new foreign minister, Luis Videgaray, supposedly one of Trump’s favorite Mexicans. A longtime close advisor to Peña Nieto, Videgaray set up the controversial visit by Trump to Mexico in the heat of the presidential campaign last year. He stepped down following public outrage at the trip, which was generally considered a disaster that only benefitted the Republican candidate.
Speaking this week on national television, Peña Nieto said Videgaray has been instructed to “accelerate dialogue and contacts” to build a “constructive working relationship” between the two administrations. His predecessor, Claudia Ruiz Masseiu, had been an outspoken critic of Trump and had publicly opposed his visit to Mexico.
In response to the hammering the peso took on Wednesday, Mexico’s central bank sold at least US$1 billion on Thursday to prevent the currency from sliding even further.