The future of the Mexican sector was looking even more bleak in the early months of the Trump administration. One of the darkest days came just before the president-elect took office in 2017, when former Ford CEO Mark Fields canceled a $1.6 billion plant in San Luis Potosi to build a new generation of the Ford Focus sedan.
Fields defended the move as a business decision, but it was widely seen as a nod to Trump, who publicly expressed his gratitude. Other automakers took note. Not by ending their investments in the Mexican auto industry, but mostly by burying them in Mexico-only press releases — or no press releases — while amplifying every dollar spent in the U.S., past, present and future.
With the decline of the U.S. sedan market, Fields has been vindicated in hindsight, although the cancellation remains symbolically important for the fear it struck in Mexican government officials and the auto industry in general.
"Yes, we had the cancellation by Ford for Focus at San Luis Potosi, but we can't say necessarily that it was Trump-related," said Guido Vildozo, senior manager for Americas forecasting at IHS Markit. "It was also related to the downfall of passenger cars in the U.S. None of the other [Mexican] plants saw their production being canceled."
For example, Vildozo said, Toyota stayed the course on its plans for a factory in Guanajuato state to build the Corolla sedan, announced in 2015, even as Trump criticized it. Rather than cancel a sedan factory, Toyota assigned the popular Tacoma pickup to the plant instead and moderately reduced its investment. Toyota also later announced a new Alabama factory in a joint venture with Mazda, relieving some of the Trump pressure.
After the wild ride of the past three years, analysts now see a gradual return to order.
The successful negotiation of USMCA essentially takes the trading bloc full circle: All three nations and their respective industries will compete internally for automotive investment and collectively face off with Asia and Europe. The U.S. may have gained some advantage over Mexico through increased regional and high-wage content in the pact, but not by much.
"For now, our forecast basically calls for a status quo holding into the foreseeable future," said Vildozo. "From a tangible standpoint, we can't necessarily say that President Trump has damaged where demand is going to be as far as Mexico."
But even as Lopez Obrador and auto industry officials celebrated the apparent last steps toward ratification of USMCA in December, they faced the prospect of a painful decline in the auto sector after a decade of growth.
While not entirely absolving Trump from scaring off Mexico investors with his talk of blowing up the free-trade accord and imposing auto tariffs for national security reasons, top Mexican auto industry executives mostly blamed international markets for the drop-off in production and exports, along with deteriorating domestic economic conditions for waning sales at home.