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US Investment Heavily Flows Into Mexico Despite NAFTA Uncertainty

US companies are continuing to pour investment into their Mexican operations despite ongoing uncertainty over the NAFTA (North American Free Trade Agreement) negotiations.

Investments from the United States grew 33% last year to US$13.9 billion, with the combined total from the US and Canada accounting for more than half of Mexican FDI, at 46% and 9.1%, respectively, according to data from Mexico’s Ministry of Economy.

The figures illustrate how trade between the two countries is deeply ingrained, and that investors are neither worried nor do they consider Trump’s threats to be serious.

“As long as we have this negotiation going, nobody’s going to build billion-dollar plants in Mexico,” Trump said recently, meaning that the uncertainty over talks would discourage investments in his southern neighbor.

Chinese and European businesses are also expanding operations in Mexico. German auto parts supplier Bosch, for example, revealed this week that it would build a new plant in Guanajuato by investing over €100 million (US$124 million) in the Celaya factory, which is to produce electronic components.

Bosch already operates 12 production sites in Mexico employing some 16,000 workers. The new Celaya plant is set to create 1,200 additional jobs. Much of what it produces will be exported to the United States.

Last year, when President Donald Trump threatened to scrap the agreement, Mexico bolstered its business relationships with Latin American allies, particularly the members of the Pacific Alliance, a trading bloc that accounts for half of all trade in the region and covers around 200 million people.

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Mexico’s total FDI for 2017 was US$29.7 billion.

Narayan Ammachchi

News Editor for Nearshore Americas, Narayan Ammachchi is a career journalist with a decade of experience in politics and international business. He works out of his base in the Indian Silicon City of Bangalore.

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