BMW Won’t Scrap Plans For Mexico Factory, Despite Donald Trump’s Border Tax Threats

January 9, 2017, 8:34 AM UTC
BMW Plans To Invest $900 Million At U.S. Plant For New X4 SUV
Bayerische Motoren Werke AG (BMW) medallions sit in a pile at the BMW manufacturing plant in Spartanburg, South Carolina, U.S., on Wednesday, Jan. 11, 2012. Bayerische Motoren Werke AG (BMW), the world's largest maker of luxury autos, will invest about $900 million in its South Carolina factory to expand capacity and prepare the facility to produce a new sport-utility vehicle. Photographer: Ariana Lindquist/Bloomberg via Getty Images
Ariana Lindquist—Bloomberg via Getty Images

Luxury carmaker BMW (BMWYY) has reaffirmed its commitment to open a new manufacturing plant in Mexico, despite the threat of steeper import taxes by President-elect Donald Trump.

The BBC reports that BMW remains “absolutely” committed to the new $1 billion facility, bucking a trend by other manufacturers of increasing their domestic investments or moving factories back to U.S. soil. Trump has floated the idea of import taxes of 35% for companies who manufacture outside of the U.S.

BMW’s proposed plant, slated for the Mexican state of San Luis Potosi, will produce the company’s 3 Series model to be sold across North America. A representative told the BBC that the company would also bolster its investment in a plant in South Carolina by $1 billion, pointing out that BMW was the biggest exporter of vehicles from the U.S. in terms of value.

“I don’t think there’s any discussion that BMW is not at home in the United States. Yes we are building a plant in Mexico. Yes we built a plant in Brazil last year. Yes we are building plants in other parts of the world as our capacity increases. But that’s part of a normal strategic manufacturing direction,” BMW’s sales and marketing director Ian Robertson told the BBC.

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Throughout his campaign and in the recent weeks leading up to his inauguration, Trump has taken aim at automakers who have moved manufacturing jobs abroad. Last week the President-elect threatened to impose a “big border tax” in a series of tweets directed at automakers including Toyota (TM) and General Motors (GM).

“General Motors is sending Mexican-made model of Chevy Cruze to U.S. car dealers tax-free across border. Make in USA or pay big border tax!” Trump said on Twitter.

A number of manufacturers have recently announced plans to boost domestic production and scrap plans to build abroad. Fiat Chrysler Automobiles (FCAU) announced Sunday that it would produce three Jeep models in the U.S. with a $1 billion investment in two plants in the Midwest, creating a projected 2,000 jobs. The company also said it would also potentially bring production of a Ram heavy-duty pickup truck back to the U.S. from Mexico.

Ford Motors likewise cancelled its plan to build a $1.6 billion plant in Mexico in favor a facility in Michigan. Ford CEO Mark Fields cited Trump’s proposed corporate tax reforms as part of his decision to up investment in the U.S., where the company is already the biggest auto producer and among the biggest exporter of vehicles made in the U.S.

This story has been updated.