Walmart won’t be sitting idly by as Donald Trump unravels U.S. relations with Mexico, the mega retailer has plans to invest $1.2 billion in distribution centers there.
The retailer will spend the money to build distribution centers in the Yucatan Peninsula to better supply its stores in the region, according to the Yucatan Times. The move is expected to generate 10,000 jobs and reduce lead times and costs in the supply chain.
Walmart currently has 2,379 retail units throughout Mexico under its different brands, including 256 Walmart Supercenters. According to Walmart’s website, the company employs as many as 194,000 workers in the country.
Walmart had said in December that it would invest $1.3 billion in Mexico over the next three years (which followed a $2.6 billion expansion there over the last four years) to help grow and support the company’s logistics infrastructure.
“We are convinced that Mexico is a country rich in opportunities,” Guilherme Loureiro, CEO of Walmart de Mexico y Central America (Walmex), said at the time, and that sentiment still seems to hold.
Those opportunities, however, could be challenged as a result of Trump’s new trade policies.
There’s no telling quite yet what will happen to NAFTA and Trump’s intent to renegotiate it, or whether the U.S. will in fact move forward with a 20 percent tax on all imports from Mexico, but talk of the un-built border wall is already dividing the two nations.
Some analysts expect a slowdown in investments in Mexico because of the current trade uncertainty, and that may have already begun.
Trump has taken credit for Ford scrapping its Mexico plant and instead investing $700 million to expand its Michigan plant to produce more electric cars. Ford CEO Mark Fields said the move wasn’t linked to Trump’s shaming of shipping jobs to Mexico, but a “vote of confidence” in the pro-business environment Trump is creating.