Trump v the car industry

Ford Focus on assembly line Image copyright Getty Images

Ford's decision to cancel a $1.6bn investment in Mexico and invest an extra $700m in Michigan will be widely seen as concrete evidence that Donald Trump's economic nationalism is having the intended effect.

Coincidentally, Ford's decision comes on the same day that the new President-elect launched an attack on General Motors for producing cars in Mexico bound for the US market.

"Build them in the USA or face big border tax" said the incoming US president on Twitter.

Cars made in Mexico can move across the border tax free thanks to the North American Free Trade Agreement (NAFTA), something that Donald Trump attacked during his campaign for causing the loss of US manufacturing jobs to cheaper labour.

In fact, only a tiny fraction (2,400 out of 190,000) of the GM model he singled out, the Cruze, are made in Mexico.

But while he may have picked on the wrong model, the message was unmistakable - the President-elect's hostility to NAFTA hasn't faded post-victory.

That position - and its popularity among many US consumers - is clearly not lost on car makers. GM was quick to take to the airwaves to assure US customers that most GM cars are still made in the US and shares in the company recovered from early falls.

The Ford Focus will be made in Mexico and while Ford's boss credited the business-friendly promises of the incoming President, he insisted it was switching investment in petrol cars in Mexico to electric cars in Detroit for its own business reasons.

Shares in other targets of Mr Trumps ire, like defence contractor Lockheed Martin, did not recover so quickly and the President-elect will know his comments can cause ructions in boardrooms.

Precisely the effect he is going for - and after today, one he will feel is working a treat.