Mexico Panics As Trump's Leverage "Far Greater Than What Mexican Elites Thought"
by Tyler Durden.
Earlier this morning we noted that the Mexican Peso was plunging once again - very close
to all-time record lows - as fears spread that Ford's decision yesterday to cancel a
$1.6 billion plant may become the norm following president-elect Trump's tweet that "this is
just the beginning."
And while many senior politicians within the Mexican government dismissed Trump's campaign
speeches as empty rhetoric, per the Associated Press, Ford's cancellation of it's $1.6 billion
auto plant has served as a "much needed wake-up call" that shows that Trump has far greater
leverage "than what Mexican elites thought until recently."
"Trump leaves Mexico without 3,600 jobs," read the headline on El Universal.
"Ford's braking jolts the peso," said Reforma, referring to the Mexican currency's nearly
1 percent slump following the news.
Two weeks before inauguration, the scuttling of the planned Ford factory and Trump's pressure
on General Motors should be a "much-needed wake-up call," said Mexico analyst Alejandro
Hope.
It shows "how much actual leverage Trump has within specific companies, which is far greater
than what Mexican elites thought until recently," Hope said.
"They claimed that at the end of the day economic interests would prevail over political messaging.
That's clearly not the case."
All of which has caused some level of panic within the Mexican political and media spheres
from the elites who are slowly realizing that when Trump says he wants to disrupt the status
quo by renegotiating NAFTA and building a border wall, "he means it"....as completely
shocking as it may be that a politcian might actually mean what he says.
In an editorial, El Universal also recalled the deal Trump struck in December with Carrier
to keep 800 of 1,300 jobs at an Indiana furnace factory from being sent to Mexico, in return
for millions of dollars in tax incentives.
It also implicitly criticized the Mexican government's response to the incoming administration.
"Mexico loses thousands of jobs with no word on a clear strategy for confronting the next
U.S. government which has presented itself as protectionist and, especially, anti-Mexican,"
the paper wrote.
"Trump will try to recover as many U.S. companies that have set up in Mexico as possible.
He will try to make them return at whatever cost, through threats or using public resources."
"Ford's decision is indicative of what awaits the economies of both countries," the daily
La Jornada said.
"For ours a severe decrease in investment from our neighboring country, and for the
U.S. a notable increase in their production costs."
Hope said more decisions like Ford's are likely to come.
And while the loss of a single planned plant probably does not fundamentally change the
U.S.-Mexico economic relationship, "it certainly shows that the idea that the status quo was
entrenched was false."
"This should put us on notice that when he says that he wants to renegotiate NAFTA, he
means it," Hope said.
As we pointed out a few days ago, with Trump scoring new victories with every passing day,
the question no longer seems to be whether or not Vicente Fox will pay for the "f**king
wall," but rather, how he'll pay for it...cash or credit, Mr. Fox?
The video link for the video is in the article below in our description.
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