Q&A: Mexico Manufacturing Under the Trump Administration

As the Trump Administration considers reconstructing trade deals and slapping steeper taxes on imports from foreign countries like Mexico, California Business Journal reached out to Co-Production International CEO Enrique Esparza to get his take on the heated issue.

San Diego-based Co-Production International (CPI), a 40-year-old administrative services provider for U.S. businesses operating in Mexico, helps facilitate successful expansions of U.S. manufacturing operations. CPI has handled the complete setup of hundreds of U.S. operations in Mexico, including managing the day-to-day administrative duties in accordance with regulations.

What is the pulse of manufacturers in Mexico now that Trump is President? 

Most Mexican manufacturers are skeptical to the changes the President is proposing. They are cautiously optimistic. There is a legitimate concern for his comments, but manufacturers are in a standby mode. For now, it’s a wait and see attitude. Soon, I think we’ll have a better gauge on his intentions.

How are your U.S. clients and contacts reacting?

Some clients have expressed concerns. Some clients export to other countries besides the U.S. so they will not be impacted by the President’s actions. As for our contacts, it’s a very mixed basket — some are very concerned and some feel it may not change too dramatically.

How are your Mexican business partners and colleagues reacting to President Trump’s victory?

It is an interesting reaction because some of our Mexican business partners feel that the U.S. is the one that should be concerned more than Mexico, given the attitude that President Trump takes on some of his positions. Again, it’s a wait and see attitude. There have been some interesting side notes in Mexican politics that may play in its favor. At this point, the majority of us are speculating. There hasn’t been anything definitive from the Trump Administration as to what the President will do. There has been some talk about 35% increases in a border tariff but at this point we don’t know. We are all cautiously optimistic that all will turn out well.

Despite President Trump’s campaign threats against NAFTA and trade, do you see the border economies and cross-border manufacturing resilient to any potential changes.

NAFTA is an agreement that has been around since 1994. I think it will be healthy to review it and to make sure that all of the participants are getting their fair shake. As for changes to NAFTA, I think that President Trump is going to focus on Asian imports and I don’t think it will be a general tax or tariff specifically on Mexican imports. It might be a tariff on imports period. If you look at our trade balances, you will see that China has a much higher trade with the U.S. than Mexico.

Over $1.5 billion dollars is traded bilaterally between the U.S. and Mexico every day. The Mexican state of Baja California, just south of San Diego, is home to more than 600 medical device, electronics, automotive and aerospace manufacturers from all over the world. This industry force is supported by a workforce of over 257,000 people. How much is at stake here?

There’s a lot at stake. The Mexican manufacturing industry carries a significant weight with the U.S. economy and U.S. jobs specifically.

What are your thoughts on manufacturing and trade relationships between the U.S. and Mexico under the new administration?

I think it may be abrasive at first. But again, it is far too early to determine what the cabinet will do, and how they will support the President’s actions and his campaign promises. It’s all speculation. But if President Trump acts aggressively against Mexico, I can see Mexico being reciprocal in that action.

What strategies or change in strategies will CPI employ to continue to promote manufacturing in the region in anticipation of Mr. Trump’s presidency?

While California is our neighbor, there are plenty of manufacturing pools to draw from. The U.S. is one country that we promote to, but we are certainly promoting in other parts of the world — in Europe primary. I feel there are still a lot of opportunities for the manufacturing industry along the border region and specifically for CPI. We have a strong reputation for what we do in our industry and we think globally.

With Tijuana and Baja California’s proximity to California, do you see your relationship with California separate from that of the U.S. as a whole?  And are you receiving support and guidance from California, specifically the Chamber of Commerce, cross-border business organizations and the California state government?

I see California separate from the rest of the U.S. However, any polices that Mr. Trump’s administration would impose would apply at a federal level, which wouldn’t make any difference whether they were in California or Texas or anywhere else. Our neighbors would be impacted. As far as receiving guidance and support from the Chambers or our other business partners in California, we are still very active with the Otay Mesa Chamber of Commerce and the U.S.-Mexico Chamber of Commerce, so if anything, it has served as a way to unite because we could all potentially be affected by some of the measures that President Trump has proposed. In that sense, even though we are an independent country and an independent state, we very much depend on each other and so it has been more of a rallying cry than an excuse to separate.

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