MEXICO CITY — By attacking the North American Free Trade Agreement, promising a U.S.-Mexico border wall and embracing protectionist policies, President Donald Trump has managed to dent Mexico's auto industry over the last year.
But the damage is far less than what some economic analysts on both sides of the border feared, leaving Mexican trade negotiators holding a stronger hand than expected as talks to renegotiate NAFTA head into their eighth round next month.
With two months of Mexico industry numbers in for this year, the biggest casualty of the administration's tough talk is the sharp drop in domestic Mexican auto sales.
Economic uncertainty is kryptonite for consumer confidence, and the combination of Trump's threat to exit NAFTA and the prospect of a leftist Mexican president taking power in December after elections in July has car buyers on edge.
Auto sales in Mexico fell 7.2 percent in February to 109,484 units, bringing the accumulated retreat for the first two months of the year to 9.4 percent.
Auto deliveries have now fallen for eight straight months, according to the Mexican Automobile Distributors Association.
Mexico notched record auto sales of 1.6 million in 2016, followed by a drop to just over 1.5 million last year. While that pales in comparison to the U.S., Mexico is a young market with more than 120 million people and potential for big gains over time.
Despite rising interest rates, higher sticker prices and a spike in gasoline prices as government subsidies were lifted, the auto industry and the Mexican economy in general are holding up reasonably well, said industry officials.
"The strong economic crisis that some analysts anticipated from anti-Mexico policies and the protectionism exacerbated by Trump has not come to pass," said Guillermo Rosales, head of the auto distributors association.
While Mexican consumers are holding back to see what happens with NAFTA and the presidential race, Mexico's auto export sector is going gangbusters and delivering trade surpluses that are helping to stabilize the economy, Rosales said.
Auto output rose 6.2 percent in February to 328,352 light cars and trucks. For the first two months of the year, production rose 6.1 percent to a record 632,107 units, according to the Mexican Automotive Industry Association.
Mexican auto exports in the January-February period rose 8.5 percent to just over 507,000 vehicles, also a record. About three-quarters of the exports went to the U.S.
Eduardo Solis, head of the auto industry association, also stressed another record: Mexico had a nearly $71 billion trade surplus in autos and auto parts last year, including light and heavy vehicles and motorcycles.
Most of that is with the U.S., and Mexico's trade surplus was one of the original reasons that candidate Trump put a target on NAFTA with a promise to fix it or abandon it.