Japan backs Toyota after Trump broadside over Mexican plant
TOKYO ( Reuters) – The Japanese government defended Toyota Motor Corp. yesterday as an “important corporate citizen” of the US, after president-elect Donald Trump singled out the automaker and threatened to slap punitive tariffs on its Mexico built cars.
Trump has repeatedly hit out at US companies for using lower- cost factories abroad at the expense of jobs at home. He has slammed US automakers, including Ford which this week scrapped a planned $1.6 billion Mexico plant.
But the attack overnight on Toyota is his first against a foreign automaker. “Toyota Motor said will build a new plant in Baja, Mexico, to build Corolla cars for U. S. NO WAY! Build plant in US or pay big border tax,” Trump tweeted.
Toyota shares fell more than three percent before recovering, and Honda Motor Co. and Nissan Motor Co. slid around two percent – even as the government and analysts sought to brush off the impact of the attack.
Chief Cabinet Secretary Yoshihide Suga told reporters yesterday that Toyota was an “important corporate citizen,” while Trade Minister Hiroshige Seko stressed the contribution of Japanese companies to US employment.
“We think the impact on business performance is limited,” Akira Kishimoto, a senior analyst at JP Morgan, said in a note.
“A cool judgement is needed.”
Toyota’s exposure to Mexico is limited, Kishimoto said, adding that even an “extreme case” tariff of 20 percent would hit its operating profit by around six percent. Trump has threatened a 35- percent tariff on cars imported from Mexico.
Toyota is just one of a host of companies operating in Mexico. It has an assembly plant in Baja California, where it produces the Tacoma pickup truck, and where it could increase production.
Trump’s tweet, however, confused Toyota’s existing Baja plant with the planned $1 billion plant in Guanajuato, where construction got under way in November, days after the election.
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.
Baja produces around 100,000 pick-up trucks and truck beds annually. Toyota said in September it would increase output of pick-up trucks by more than 60,000 units annually.