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Ford to scrap $1.6 billion plant in Mexico as Trump targets General Motors

Ford has said it will cancel plans for a new plant in Mexico and instead expand a facility in the US. Hours earlier, President-elect Donald Trump threatened General Motors with a tax for importing cars from Mexico.

Ford Motor Company said Tuesday it is canceling plans for a new $1.6 billion (1.54 billion euro) plant in Mexico, but said the production of its small Focus models would still take place in Mexico.

Instead of the new plant in the Mexican state of San Luis Potosi, the second-biggest US automaker said it would invest $700 million to expand an existing facility in the US state of Michigan to make electric, hybrid and self-driving vehicles. The investment, the company said, would create 700 jobs in the US.

Mexico's Economy Ministry said it regretted Ford's decision in a statement, but said it obtained assurances that the automaker would pay the state of San Luis Potosi for any costs associated with the scrapped investment.

Ford's chief executive Mark Fields said market forces had swayed Ford's decision to not build the San Luis Potosi plant, with low gas prices and low interest rates hampering small car sales.

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Fields also noted President-elect Donald Trump's promises to make the US more competitive by lowering taxes and easing regulations.

"We believe these tax and regulatory reforms are necessary to boost US competitiveness," Fields said, speaking in Flat Rock, Michigan, where the assembly plant is located.

During his presidential campaign, Trump said that if elected, he would not allow Ford to open its plant in Mexico and threatened to add tariffs to any vehicles Ford imported from the US' southern neighbor.

Trump targets GM

The announcement came hours after the president-elect criticized General Motors (GM), the largest US automaker, over the company's imports from Mexico.

In a tweet, Trump said the Cruze model small cars GM makes in Mexico and imports to US dealers could face "a big border tax!"

GM responded to the tweet with a statement emphasizing that the majority of Cruze cars sold in the US are made at a plant in Ohio, while just a small percentage are imported from a plant in Mexico.

"All Chevrolet Cruze sedans sold in the US are built in GM's assembly plant in Lordstown, Ohio," the car giant said.

"GM builds the Chevrolet Cruze hatchback for global markets in Mexico, with a small number sold in the US."

Mexico's free trade deals with several countries and its proximity to the US market have made the country a top destination for international automakers, who also take advantage of comparatively low labor costs.

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rs/cmk (AP, AFP, dpa)

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