An array of U.S. companies have already postponed plans to offshore operations to Mexico in the wake of Donald Trump’s threat of “consequences” for those who uproot jobs and then try to sell products or services back into the domestic market.
The CEO of a Californian firm called Tacna, which assists U.S. companies in building manufacturing operations south of the border, told Bloomberg that three of its clients had paused potential moves. Another Texas-based firm that helps U.S. companies grow their operations in Mexico said that two of the five companies it was assisting had put plans on ice, Bloomberg reports.
Trump’s campaign pledge to slap a 35% tariff on products sold by U.S. companies that have moved jobs overseas—and the wrangle over his highly publicized deal with United Technologies (UTX) and its Indiana based air conditioning manufacturer, Carrier—have added a new layer of complexity to political risk calculations.
Jim Courtovich, managing partner of the Washington public affairs firm Sphere Consulting, told Bloomberg, “What they did in Indiana has made it clear to every board member in America that there is a clear and present danger in outsourcing.”
For more on Trump’s efforts to prevent offshoring, watch Fortune’s video:
At this stage, its not clear whether Trump will be able to enforce his 35% tariff and some key congressional Republicans have already indicated their opposition to the proposal. But outside congress, it is a popular gambit: a recent Politico/Morning Consult poll found that 74% of registered voters support penalties against U.S. companies that move jobs overseas.
And it could be Trump’s penchant for social media spotlighting rather than threats of tax hikes that is giving companies pause. “Board members don’t like being put under a microscope and what Trump is basically saying is they’re going to have the Hubble Telescope on them,” Courtovich told Bloomberg.
“The public relations play on this is far more dangerous,” he said.
