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U.S. President-elect Donald Trump targeted Toyota Motor Corp on Jan. 5, threatening to impose a hefty fee on the world’s largest automaker if it builds its Corolla cars for the U.S. market at a plant in Mexico.
“Toyota Motor said will build a new plant in Baja, Mexico, to build Corolla cars for U.S. NO WAY! Build plant in U.S. or pay big border tax,” Trump said in a post on Twitter.
It was Trump’s latest broadside against automakers building cars in Mexico and first against a foreign automaker. The president-elect’s attacks on investments by companies in Mexico have cast a shadow over cross-border production networks central to more than $583 billion a year in trade between the two countries.
The value of the Mexican peso has skidded amid fears that Trump’s policies would harm Latin America’s second-biggest economy — and declined on Jan. 5 after Trump’s tweet.
Toyota, which announced plans to build a new Mexican facility in Guanajuato in April 2015, said it would not take away from U.S. employment.
“Toyota looks forward to collaborating with the Trump administration to serve in the best interests of consumers and the automotive industry,” Toyota spokesman Scott Vazin said.
Trump’s tweet confuses Toyota’s existing Baja plant with the planned $1 billion plant in Guanajuato, where construction got under way in November. A Trump spokeswoman did not return a request seeking additional comment.
Baja produces around 100,000 pickup trucks and truck beds annually. The Guanajuato plant will build Corollas and have an annual capacity of 200,000 when it comes online in 2019, shifting production of the small car from Canada.
The Japanese automaker’s American Depositary Receipts fell after Trump’s tweet. Japan’s Nikkei share average dropped on Jan. 6 as automakers dragged after Trump’s comments on Toyota. The Nikkei fell 0.3 percent to 19,454.33. For the week, it was up 1.8 percent.
Japan said on Jan. 6 that Toyota Motor Corp is an important corporate citizen in the United States, after Trump criticized the automaker’s plans to build a new factory in Mexico.
Chief Cabinet Secretary Yoshihide Suga, the chief government spokesman, made the comment at a regular news conference.
‘No immediate plans to curb production in Mexico’
Toyota President Akio Toyoda said in Japan on Jan. 5 that the automaker has no immediate plans to curb production in Mexico, preferring to wait until after Trump’s Jan. 20 inauguration before deciding whether to make any changes.
“We will consider our option as we see what policies the incoming president adopts,” Toyoda said at an industry gathering in Tokyo on Jan. 5 before Trump’s tweet, when asked whether his company was considering any changes to a production plant the automaker was building in Mexico.
Automakers in the United States have been slammed by Trump for building cars in lower-cost factories south of the border, which he said costs American jobs. Pressure to curb that production intensified this week after Ford Motor Co scrapped plans to build a $1.6 billion assembly plant in Mexico after Trump harshly criticized the investment.
Ford, however, still plans to shift production of small cars to Mexico from Michigan, even as it uses $700 million from the planned Mexico investment to expand its operations in Flat Rock, Michigan, and add 700 jobs.
During the campaign, Trump criticized barriers to U.S. auto exports to Japan and said the U.S. government did not do enough to open the market to more American-made vehicles.
“Until you open your markets, you’re not selling any more cars over here,” Trump said of Japan in an August 2015 interview with the Detroit News.
“That’s going to force people to build in the United States.”
Toyota has extensive U.S. investments, operates 10 U.S. plants in eight states and builds more than 1.3 million vehicles in the United States annually.
Between 1994 and 2013, U.S. auto factory jobs dropped by a third while jobs in Mexico rose almost five-fold over the same period as lower-wage production boomed.
20 percent of all car output in North America
Mexico now accounts for 20 percent of all vehicle production in North America and has attracted more than $24 billion in auto investment since 2010, according to the Ann Arbor, Michigan-based, Center for Automotive Research.
Based on current investment plans, Mexico’s auto production capacity will grow by another 50 percent over the next five years, according to the center, which draws funding from the auto industry.
It said Toyota imported fewer vehicles from Mexico than any other major automaker building cars there last year. Detroit’s Big Three automakers collectively exported more than 1.1 million vehicles to the United States from Mexico in 2016, while Toyota sent about 47,000 Mexican-made vehicles to the United States.
Trump has also said General Motors Co could become subject to tariffs on Mexico-made cars for the U.S. market, and that he would like to renegotiate terms of the North American Free Trade Agreement signed with Canada and Mexico, or scrap it altogether.
Trump criticized GM for importing Mexican-made versions of the Chevrolet Cruze, even as the automaker is laying off 1,200 workers in Ohio this month who assemble the car.
