by Carina Lopez
MEXICO CITY, Jan. 6 (Xinhua) -- U.S. carmaker Ford will suffer the consequences after canceling its planned investment worth 1.6 billion U.S. dollars in Mexico, a Mexican academic has said.
Ford will grapple with higher salaries and taxes in the United States,
Hector Moreno, a public policy professor with Monterrey Institute of Technology and Higher Education, said in a recent interview with Xinhua.
Ford announced Tuesday the cancellation of a planned factory in the central state of San Luis Potosi, which would have generated 2,800 jobs, It has decided instead to expand its plant and hire 700 new people in Flat Rock, Michigan, in the United States.
"There is no doubt that the cancellation of Ford's plant in San Luis Potosi is (U.S. President-elect Donald) Trump's doing. But it is questionable whether this move will be a long-term success," Moreno said.
Ford's announcement also came on the same day when Trump threatened to impose higher taxes on General Motors (GM) for producing cars in Mexico and importing them to the United States free of taxes under the North American Free Trade Agreement (NAFTA).
GM responded by saying most of its Cruze cars are made in Ohio and only a small number of the cars of the hatchback version are imported from Mexico.
"Other investments and strategies will be canceled until it is clear what exactly Trump's long-term strategy about Mexico will be," Moreno said.
Therefore, Mexico needs to find out new horizons and can turn to Asian markets such as China to reverse the blow to its automotive sector, according to Moreno.
Moreno warned that while the automotive industry has been a major success for Mexico in recent years, its growth will likely slow down in the short term.
Ford's existing four plants in Mexico will have to reconfigure and adapt themselves to this situation, he added.
Trump has repeatedly expressed his anger at U.S. companies shipping factories overseas and has vowed to slap a 35 percent tariff on any products imported by such companies to the United States.
The president-elect focused much of his campaign on railing against free trade agreements signed by Washington and has vowed to either scrap or renegotiate NAFTA.