THE ASAHI SHIMBUN
January 22, 2025 at 18:23 JST
Carrier trailers transport Toyota vehicles for delivery to the United States at the Otay Mesa Port of Entry in Tijuana, Mexico, on Nov. 27, 2024. (REUTERS)
With Donald Trump back in the White House, Japanese companies operating in North America are again bracing for the potential economic impact of protectionist trade policies.
On his first day in office on Jan. 20, Trump reiterated plans to impose a 25 percent tariff on cars imported from Canada and Mexico.
This poses a significant challenge to Japanese automakers that have made substantial investments in manufacturing facilities in both countries.
Toyota Motor Corp. and Nissan Motor Co. each have two plants in Mexico, while Honda Motor Co. and Mazda Motor Corp. each operate one factory there. In Canada, Toyota and Honda each operate a plant.
In addition to proximity to the United States, the world’s second-largest automotive market, Mexico offers lower labor costs while Canada is home to well-established supplier networks.
The potential tariffs could disrupt local supply chains, causing ripple effects across the entire industry.
It’s a situation that evokes painful memories for Japanese automakers.
During Trump’s first term, Toyota faced intense pressure from the president after announcing plans to build a new factory in Mexico.
“NO WAY! Build plant in U.S. or pay big border tax,” read a tweet blasting Toyota’s plans that Trump posted in January 2017, just before his inauguration.
Under pressure, Toyota pledged to invest an additional $10 billion (1.15 trillion yen at the exchange rate of that time) in U.S. manufacturing over the next five years.
Anticipating a potential escalation of trade tensions, Toyota sought to appease Trump by donating $1 million to his second inauguration. The amount matches sums given to the new president by General Motors Co. and Ford Motor Co.
It is believed to be the first time Toyota has donated to a presidential inauguration.
Half of all Toyota vehicles sold in the United States are manufactured outside the country, with more than 20 percent coming from Mexico and Canada.
“No matter who is in office, we will stay focused on what needs to be done,” said a Toyota executive.
While the company does not intend to immediately revise its investment plans, it is exploring options in response to the potential tariff increases.
(This article was written by Akihiro Nishiyama and Kaname Ohira.)
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