Ford cancels $1.6bn Mexico plans amid pressure from Donald Trump

Ford is cancelling plans for a $1.6bn (£1.3bn) plant in Mexico as car manufacturers come under pressure from Donald Trump over jobs.

The announcement came hours after the President-elect threatened Ford's rival General Motors with a "big border tax" over its manufacture of vehicles outside the US.

Ford said it was creating 700 new jobs as it expands a new assembly plant in Flat Rock, Michigan, that will build high-tech self-driving and electric vehicles.

It said the investment was being paid for using money it had previously earmarked to build a new plant in San Luis Potosi, Mexico.

But Ford also said that "to improve company profitability" it would build the next generation of its Focus model at an existing plant in Hermosillo, Mexico.

This would make way for "two new iconic products" at another plant in Wayne, Michigan, safeguarding 3,500 jobs, Ford said.

Chief executive Mark Fields told CNN it looked at factors including a "more positive US manufacturing business environment under President-elect Trump" before making the decision.

He said: "It's literally a vote of confidence around some of the pro-growth policies that he has been outlining and that's why we're making this decision to invest here in the US and our plant here in Michigan."

The U-turn on plans to build a big plant in Mexico follows criticism by Mr Trump over Ford's investments in the country.

It came after the President-elect took aim at GM on Twitter.

He wrote: "General Motors is sending Mexican-made model of Chevy Cruze to US car dealers tax free across border.

"Make in USA or pay big border tax!"