Ford has reversed plans to build a £1.3 billion plant in Mexico - hours after Donald Trump threatened to impose a "big border tax" on companies.

The motor company had hoped to construct a plant south of the US border, but on Tuesday announced it would invest £570 million in its Michigan factory instead.

Ford's move came as the incoming President warned motor rivals General Motors Co (GM) that it faced hefty border taxes if it decided to manufacture some of its vehicles in Mexico.

But Ford's CEO said their decision to pull out of Mexico was due to a "lack of demand" for small cars, rather than political pressure.

With just under three weeks until Trump is installed into the White House, his latest comments on border tax have marked an uncommon degree of presidential intervention into corporate affairs.

On Tuesday, the billionaire Republican warned GM about their Mexico plans:

On previous occasions the 70-year-old has vowed to hit companies that shift production from America to other countries.

He has warned he is willing to levy taxes as high as 35% on exports into the US.

Among Trump's other recent targets include United Technologies, Boeing and Lockheed Martin.

Trump has also has denounced the North American Free Trade Agreement between the US, Mexico and Canada.

Meanwhile, the President-elect has highlighted decisions by companies to keep production in the United States, including United's Carrier unit in Indiana.

GM announced in 2015 that it planned to build its next-generation Chevrolet Cruze compact in Mexico in a bid to expand into the Latin American nation.