AMLO says Trump's threat to ban Mexican cars is just a bluff

Donald Trump’s threat to ban Mexican-made cars is a bluff that “isn’t serious,” according to the nation’s President Andres Manuel Lopez Obrador.

Trump’s proposal won’t happen, since such a move would significantly raise prices for U.S. drivers, Lopez Obrador told reporters.

“A car imported from Mexico represents savings to a U.S. buyer of between $10,000 and $15,000,” he said Wednesday during his daily press conference.

Lopez Obrador, known as AMLO, said he’s not too concerned about comments made by Trump in the heat of an election campaign, since when he was in office he had supported the North American free trade agreement, known as USMCA.

The president made his remarks in response to a question about Tesla Inc.’s decision to halt investment in its planned factory in northern Mexico until after the U.S. election. The company cited political risk from Trump’s proposal to raise tariffs on Mexican-made goods.

Shares in Mexican real estate investment trusts slumped in the wake of the comments by CEO Elon Musk on the company’s earnings call on Tuesday. The stocks have benefited from optimism about a factory boom in Mexico that was partly fueled by Tesla’s announcement in late 2022 that it would invest in the country. That also triggered hopes that additional investments from auto parts suppliers would be brought in.

‘Calling for a rebellion’

Trump’s proposal to shut the U.S.-Mexico border would cause chaos, affecting the transit of 300,000 vehicles and a million people each day, and limit trade in products crucial to the U.S. economy, Lopez Obrador said.

“To take such a step would be tantamount to calling for a rebellion on both sides of the border because of the damage it would cause to people, industry and commerce,” he said.

Lopez Obrador also said that the USMCA helps prevent North America from falling behind China. The president showed reporters a letter he sent to Trump, in which he lays out the benefits of the trade agreement.

Real estate investment trusts Prologis Property Mexico and FIBRA Macquarie Mexico both dropped on Wednesday. Mexican investors are braced for further volatility as the market reacts to Trump’s rhetoric.

The comments from Trump and Musk “are certainly chilling for the industrial sector,” said Rodolfo Ramos, a strategist at Bradesco BBI.

Companies looking to set up shop in Mexico are taking a wait-and-see position ahead of the U.S. vote, he said.

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(With assistance from Maya Averbuch.)

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