MICHIGAN, U.S. - In a bid to lower the risk to its profit, in case the U.S. President Donald Trump pulls the United States out of the North American Free Trade Agreement, Fiat Chrysler will move its plant from Mexico to Michigan.
Fiat Chrysler Automobiles said on Thursday that it will shift production of Ram heavy-duty pickup trucks from Mexico to Michigan in 2020.
The automaker added that it would create 2,500 jobs at a factory in Warren, Michigan, near Detroit and will also invest $1 billion in the facility.
The Mexican plant will be “repurposed to produce future commercial vehicles” for sale in global markets.
Sergio Marchionne, the Chief Executive of the Fiat Chrysler raised the possibility that the automaker would move production of its heavy-duty pickups to the U.S., saying U.S. tax and trade policy would influence the decision.
According to experts, if the U.S. exits NAFTA, it could mean that automakers would pay a 25 percent duty on pickup trucks assembled in Mexico and shipped to the U.S.
Further, the company officials believe that about 90 percent of the Ram heavy-duty pickups made at Fiat Chrysler’s Saltillo plant in Mexico are sold in the U.S. or Canada.
Later this month, negotiators for the United States, Mexico and Canada are scheduled to meet for another round of talks on revising NAFTA.
Earlier this week, Canadian government officials said they are convinced that Trump intends to announce his intention to quit the agreement.
Several times since his inauguration, Trump has threatened to force the rollback of NAFTA, which enables the free flow of goods made in the United States, Canada and Mexico across the borders of those countries.
He also lambasted automakers for moving jobs and investment in new manufacturing facilities to Mexico and has repeatedly prodded them to add more auto production in the U.S.
Praising Fiat Chrysler’s announcement, Vice President Mike Pence said, “Manufacturing is back. Great announcement. Proof that this admin’s AMERICA FIRST policies are WORKING!”
According to Mexican government data, Chrysler raised its output in Mexico by 39 percent in 2017 to 639,000 vehicles.
This has made Fiat Chrysler the third-largest producer of vehicles in Mexico in 2017, after Nissan Motor Co and General Motors Co.
Dave Sullivan, an analyst at AutoPacific Inc. said in a statement, “At least making Trump’s tax plan look like it’s rewarding workers very quickly should bode well with the administration. Part of it also is showing the administration how many workers they have here in the U.S.” and signaling the company will “pump that money right into the economy.”