As U.S. President-elect Trump forewarned a "tariff bomb," Mexico is in serious trouble over attracting a factory for BYD, a Chinese electric vehicle company.
The Wall Street Journal (WSJ) analyzed that BYD's plan to build a plant in Mexico will be a touchstone to test Trump's trade policy and determine whether the Mexican government will be prepared for a conflict with Trump.
Late last year, BYD planned to build an electric vehicle factory in Mexico and has been searching for a site.
At the same time, he has been consulting with Mexican state governments that control candidate sites and federal officials in charge of environmental regulations and import and export licenses.
But with Trump back in power, Mexican government officials fear that hosting the BYD plant would worsen relations with the Trump administration.
Trump has repeatedly said he will impose tariffs of more than 200% if a Chinese company produces cars at a factory set up in Mexico and brings them into the United States.
According to the WSJ, under the current circumstances, BYD envisions building a factory in Mexico but waiting for the political situation to change by selling electric vehicles made here to the Mexican and Latin American markets for now.
However, WSJ's observation is that even BYD's strategy has become unclear.
Some Mexican states have reportedly reduced or withdrawn benefits such as local taxes and water rate reductions originally proposed to attract BYD plants.
Mexico's federal government has also turned to a passive attitude, saying the timing is not good and it could result in stimulating Trump.
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