Mexico’s economy minister, Ildefonso Guajardo, speaks to the media after a meeting with a Japanese businessman in Mexico City on Friday. Photograph: Carlos Jasso/Reuters
Mexico must be ready to respond
immediately with its own tax measures if the incoming administration of
President-elect Donald Trump imposes a border tax,
the country’s economy minister has said, warning such protectionism may trigger
a global recession.
Trump, who takes office on 20
January, has promised a “major border tax” on companies that shift jobs
outside the United States, and such a measure could hobble Mexico’s exports to
its top trading partner.
“It is clear we need to be
prepared to immediately neutralise the impact of such a measure,” the economy
minister, Ildefonso Guajardo, said in an interview on Mexican television.
“And it is very clear how –
take a fiscal action that clearly neutralises it,” he said.
Trump has repeatedly attacked Mexico over trade, jobs and
immigration since he first launched his run for the White House in 2015,
driving the peso currency to historic lows and unnerving investors, especially
in the auto sector.
Guajardo said Trump’s proposed
tax “was a problem for the entire world” and that it “would have a wave of
impacts that could take us into a global recession”.
Nonetheless, the minister said
he expected foreign direct investment in Mexico this year to total about $25bn,
with investment in the energy and telecommunications sectors expected to more
than make up for the loss of a planned $1.6bn Ford Motor Co factory that the
company said this month it is cancelling. Trump had strongly criticised the
plan, but Ford said its decision was not the result of pressure from Trump.
Guajardo also praised the
government of Japan and Toyota Motor Corp for their “reasonable” response to Trump’s threat to
impose a significant border tax if the company does not
stop making its Corolla model in Mexico for the US market. Toyota said last
week the automaker has no immediate plans to curb production in Mexico.
“Toyota has 10 plants in the
United States … and employs more than 130,000 Americans. If I were Mr Trump,
I’d treat them with more respect,” Guajardo said.
He added that he expected
total foreign direct investment during the six-year term of President Enrique
Peña Nieto, which ends in late 2018, to average $30bn annually.
Guajardo has previously warned
that US corporate tax cuts proposed by Trump, as well as the border tax, could
undermine foreign investment in Latin America’s No 2 economy.
Mexico slapped a tax on US
high-fructose corn syrup in the early 2000s after the United States refused to
allow free trade in Mexican sugar.
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