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January 7, 2017

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Trump hits out at Toyota on Twitter

THE Japanese government defended Toyota Motor Corp yesterday as an “important corporate citizen” of the United States, 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 US$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 US. NO WAY! Build plant in US or pay big border tax,” Trump tweeted.

Toyota shares fell more than 3 percent before recovering, and Honda Motor Co and Nissan Motor Co slid around 2 percent — even as the government and analysts sought to brush off the impact of the attack.

Chief Cabinet Secretary Yoshihide Suga said 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 6 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 pick-up truck, and where it could increase production.

Trump’s tweet, however, confused Toyota’s existing Baja plant with the planned US$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 is operational 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 lift output of pick-up trucks by over 60,000 units annually.


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