Nissan luxury sub-brand Infiniti has temporarily halted development work with Daimler on a small luxury car, according to Japanese newspaper Nikkan Kogyo, as quoted by Car Advice. The project was called off due to the United States market’s major shift away from passenger cars to SUVs, and the uncertainty of the North American Free Trade Agreement, or NAFTA.

Plans for the range of premium compact models to be produced in Aguascalientes, Mexico were mooted in 2015, and the facility was completed in 2017, offering a production capacity of 230,000 vehicles annually. Nissan spokesman Shiro Nagai declined to comment, however adding that Nissan and the Alliance remain committed to the partnership in place with Mercedes-Benz, according to Automotive News.

“The cooperation between the Renault-Nissan-Mitsubishi Alliance and Daimler is solid and we continue to reap the benefits of our successful cooperation, which includes a number of R&D and manufacturing initiatives around the world,” added Trevor Hale, spokesman for Infiniti. The plant in Mexico is a 50:50 joint venture between Daimler and the alliance, and currently produces the Infiniti QX50.

Elsewhere, Daimler and Nissan jointly produce engine’s at Nissan’s engine plant in Decherd, Tennessee, and the two companies worked together for the Mercedes-Benz X-Class pick-up truck, which is based upon the NP300 Nissan Navara.

GALLERY: Infiniti QX50