Austrian steel firm shifts production to Mexico to dodge Trump tariffs
Austrian steelmaker Voestalpine has defied US President Donald Trump by announcing it will shift part of its automotive production line from the US to Mexico to avoid a threatened tariff on imported steel.
The firm, which specialises in making finished parts for the rail and automotive industries, has sales of €1.3bn (£1.18bn) in the US, where it has 48 sites. Most work with domestic steel, but a third of revenue relies on imported materials that are unavailable in the US.
Its chief executive, Wolfgang Eder, told Reuters: “If I have an empty hall in Mexico, which can be easily rented at any time, then I can install the machines needed for assembly fairly quickly.”
Read more: Shares on Wall Street hit record highs as Trump announces Mexico trade deal
Eder claimed the partial shift in production will occur in the autumn, but did not specify what cost savings were expected, saying “Things are fluctuating too much”.
Wall Street shares hit record highs on Tuesday on the back of rising investor confidence, buoyed by Trump’s announcement that he had agreed key parts of a updated version of the North American Free Trade Agreement (Nafta), first signed in 1994, with neighbouring Mexico.
Negotiations with Canada, the third member of Nafta, have resumed, which the country yet to say whether it will join the revised agreement. Trump has said he will introduce tariffs on Canadian goods, or cut Canada out of the deal entirely, if no updated agreement is reached by Friday.
Read more: US and Mexico agree trade deal to replace NAFTA
In a quarterly report released earlier this month, Voestalpine said it had experienced “Hardly any effects” from a 20 per cent import tariff on European Union-manufactured cars, which Trump had threatened to impose last month.
Eder said that Trump’s threats had not weakened US consumer demand for BMW, Daimler and Porsche vehicles, adding that he felt the trade deal with Mexico would prompt fresh negotiations between the US and EU over auto tariffs.