Japanese companies see it as risky to invest in Mexico, mainly in the automotive sector, in the face of threats by US President Donald Trump to impose tariffs on imports from this country, according to the Financial Times.
It said that the Japan External Trade Organization (Jetro) has said that four major Japanese investments in Mexico have already been halted due to uncertainty.
This adds to what Nissan CEO Makoto Uchida said his company needed to be prepared in case high tariffs were imposed.
“Maybe we can move production of these models to other places,” he said of the company’s Mexican production.
They highlighted that the Japanese automotive industry injected 18 billion dollars into Mexico in history, both in the final assembly of vehicles and in the manufacture of components.
But the Financial Times describes that the decisions were made based on low labor costs and unrestricted access to the US market.
But now Mazda and Honda have joined Nissan in warning that they could withdraw from Mexico.
Naohisa Komura, president of Plasess, another Japanese auto parts supplier that came to Guanajuato state in 2014, said investment decisions will remain frozen until there is more certainty.
“It’s extremely difficult because what Trump says is constantly changing. Without knowing absolutely nothing, we can’t do anything in terms of business decisions,” he said.
Mireya Solís, a Japan expert at the Washington-based Brookings Institution think tank, said past investments were based on the assumption that countries would seek economic growth through unrestricted trade.
“We could trust that it would be possible to ship components efficiently and do different processes in different places,” she said.
But problems were already building up even before the tariff anxiety. Naoko Uchiyama, a professor at Tokyo University of Foreign Studies, said Japanese auto companies focused for many years on building compact cars for export to the United States when they were losing market share to SUVs.
“They moved on to producing compact SUVs, but their performance has not been as good as expected,” Uchiyama said.
Source: milenio
