Volkswacht Bodensee - Mexico hails $5 bn Amazon investment in face of Trump threats

The e-commerce giant's announcement that it will pour more than $5 billion into a data center comes just days before Trump takes office having vowing to slap steep tariffs on goods from Mexico and Canada.

The investment, unveiled by Amazon at Mexican President Claudia Sheinbaum's morning news conference, is part of a push by big tech to add more storage facilities to meet the needs of artificial intelligence.

Sheinbaum, Mexico's first woman president, said the center, to be located in the central state of Queretaro, showed that her country "not only has a great present but also a great future."

On Monday, Sheinbaum presented a plan that aims to turn Mexico into the world's 10th largest economy, up from 12th now, with an ambitious goal of luring $277 billion of investment.

It included measures to replace Chinese imports with domestically produced goods, in an apparent bid to ease concerns in Washington that Chinese companies want to use Mexico as a backdoor into the United States.

Trump's threat in November to slap a 25-percent tariff on goods imported from Mexico and Canada because of illegal immigration and drug trafficking appeared to catch Sheinbaum's government by surprise.

Sheinbaum, however, has played down the prospect of a full-blown trade dispute with the United States, saying that "there will not be a potential tariff war."

The stakes are high for Mexico, which replaced China as the United States' biggest trade partner last year.

- Trade deal under scrutiny -

A free trade deal between Mexico, the United States and Canada -- which Trump successfully pushed to revamp during his last presidency -- is due to be reviewed in 2026, potentially bringing disagreements.

Sheinbaum on Monday hailed the North American pact as "one of the best trade agreements in history" and "the only way we can compete with Asian countries, particularly China."

The left-wing politician has touted the benefits for Mexico of "nearshoring" -- the trend of American companies moving production from Asia to countries closer to the US market.

Trump, however, is expected to favor "reshoring" -- bringing jobs and factories back to US soil in the face of growing concerns in Washington about the security risk posed by China.

On Tuesday, the United States finalized a rule effectively barring Chinese technology from cars in the American market.

The threat of steep tariffs has led US electric carmaker Tesla to freeze plans for a huge new factory in Mexico.

Amazon Web Services (AWS) is the world's biggest cloud computing company, with data centers scattered across the globe storing the flood of data from billions of smartphones, tablets and other connected devices.

Its biggest rivals in the sector are Microsoft and Google, which in July announced plans to build a data center in Queretaro, its first in Mexico.

AWS regional director Paula Bellizia said the center demonstrated Amazon's "commitment" to Mexico and would "contribute to Mexico positioning itself as a digital node in the Americas and a leader in Latin America."

Economy Secretary Marcelo Ebrard said the Mexican center would generate around 7,000 jobs and contribute more than $10 billion to Mexico's economic output over the next 15 years.

Data centers have drawn scrutiny from environmentalists over their massive energy consumption and the huge amounts of water used in their cooling systems.

Amazon told AFP late last year that it aimed to make all its data centers "water-positive" by 2030, meaning it would conserve or put back more water than it uses.

T.Suter--VB