By on January 5, 2017

2016 Toyota Tacoma Double Cab blue

Tuesday’s surprise announcement by Ford, where it declared plans for a new Mexican assembly plant were as dead as disco, turned up the heat on other automakers.

With President-elect Donald Trump’s campaign promise of a hefty import tax weighing heavily on the minds of auto executives, long-term production plans are being placed in limbo across the industry.

According to Reuters, sales titans Toyota and Honda are paying close attention to how Trump’s promises play out after Inauguration Day. Both automakers claim they have no plans to end production of certain U.S.-bound models in Mexico, but that doesn’t mean they’re not keeping an eye on America’s policy landscape.

“We will consider our option as we see what policies the incoming president adopts,” Toyota President Akio Toyoda said at an industry meet-up Thursday. Honda CEO Takahiro Hachigo was on the same page. He added that Mexican-made models supply both the North America and European markets.

Still, the bulk of those vehicles end up in American driveways. Toyota is in the midst of a $150 million expansion plan aimed at squeezing more Tacoma pickups out of its Tijuana plant.

Whether or not Trump could impose a tariff on imports is up for debate, as the World Trade Organization could kibosh the move. If it doesn’t, other WTO members could impose similar tariffs in retaliation — economic food for thought for the incoming administration.

[Image: Toyota]

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52 Comments on “Toyota and Honda Play the Waiting Game After Ford Surprise...”


  • avatar
    kosmo

    The 35% tariff threat is just the opening salvo in a negotiation to bring/keep jobs.

    Early days, for sure, but so far, so good — it certainly has the attention of the automakers.

    • 0 avatar
      FreedMike

      OK, if Trump is serious about this, why not confront the automakers on importing ***hundreds of thousands*** of pickups from Mexico, versus keying on a couple of models that don’t sell all that well? Why is it anti-American to import a few thousand Cruze hatchbacks that will sit on dealer lots for months, but apparently perfectly OK to build hundreds of thousands of Ram pickups in Mexico?

      Bringing production of pickups back here WOULD create jobs. Tons of them. Why no focus on that?

      When you consider the demographics of who voted for him – i.e., pickup truck drivers – that becomes clear. He’s playing to his base without reminding them that they’re part of the problem that they voted for him to correct in the first place.

      • 0 avatar
        Sceptic

        Stereotype much? None of the people I know who voted for Trump, myself included, drive pickups.

        • 0 avatar
          golden2husky

          It may be a stereotype but it is true. T-Rump had the lightly educated, blue collar folks solidly in his column. That is just a fact. Those voters, I believe, really thought that he would be able to bring back the manufacturing of consumer goods to America. That will never happen as consumers themselves buy on price. They openly wave the flag, but when push ones to shove, they vote with their dollars.

        • 0 avatar
          FreedMike

          I’m not making value judgments, sceptic…pretty much every pickup I see around here (Denver) with a political sticker on it has a Republican or conservative bent to it.

          Are YOU seeing a lot of Hillary stickers on pickups? I’m not.

          Just stating facts as I see ’em.

      • 0 avatar
        slance66

        What are you talking about? This scuttled a proposed plant because the financial basis for it may be unsound if there are tariffs. It is merely coincidental what that plan would be building. Any tariff would require changes to NAFTA, which won’t be easy, and will apply to all vehicles. So there is no effort by anyone to single out specific vehicles.

    • 0 avatar
      dal20402

      It’s not “to bring/keep jobs,” which is why it’s focused on small plants rather than big ones.

      It’s a shiny object to distract the TV- and Twitter-watching public from the real work happening in Washington, which is breathtakingly anti-worker.

      https://www.washingtonpost.com/politics/claiming-mandate-gop-congress-lays-plans-to-propel-sweeping-conservative-agenda/2017/01/01/9840338a-ceee-11e6-b8a2-8c2a61b0436f_story.html?utm_term=.d23638495ead

      Trump is there to throw around more shiny objects to distract from this stuff. He’s already made clear that he won’t stand in the way of it.

    • 0 avatar
      stuki

      I’ve always dreamt of paying 35% more for a non competition exposed junk pile; just so I can help validate the self image of some clueless New York self promoter with an orange toupee, and his ditto sycophant posse.

  • avatar
    TDIandThen....

    My industry (not cars) is also playing a waiting game – most new investment / initiatives into or out of the US was put ‘on hold’ except lobbying. Forecast investment in Canada and Mexico manufacturing is through the roof in the short and medium term.

  • avatar
    VoGo

    In an uncertain environment, consumers stop making large purchases and businesses stop making large investments.

    • 0 avatar
      DearS

      Agreed. I for one like exporting and importing when it works well. In capitalism equality usually is not part of the equation.

      A lot can be gained by trade, by free trade and a lot can be lost. I don’t think a simple tariff by itself is an answer.

      Ideally, I think if Americans had access to a good paying job and could be flexible enough to learn new jobs we can outsource jobs to other places. Companies keep the profits of trade though and continue to charge the same for cheaper products. So costs get passed down to the consumers even when companies make the cheaper. It is not a zero sum market.

      • 0 avatar
        VoGo

        Why are we surprised that as a country becomes increasingly capitalist that the returns to capital increase faster than the returns to labor?

        • 0 avatar
          stuki

          Because in a free market economy, which some with full coverage blinders on still insist we live in something resembling; returns to capital, like all else, follows a diminishing returns curve. As does returns to labor……

          Working backwards, that’s just another way of saying we’re not becoming more “capitalist” (whatever that is supposed to mean, but assuming it is meant to, to some degree, be positively correlated with economic freedom ).

          In practice, increased efficiency, which increased opportunity to trade contributes to, lowers prices on virtually anything. Benefiting virtually everyone.

          Unless someone decides to print up and hand so much purchasing power to a small group of people, that their increased demand alone, is enough to not only prevent prices from dropping, but to indeed cause them to rise 2%/year, come what may. Something that only benefits the few who are singled out to be demanders in chief.

  • avatar
    VW4motion

    And the end user “the buyer” will have to pay for this crony capitalism. UGH!

    • 0 avatar
      MAGICGTI

      These words “crony capitalism”, I don’t think you know what they mean.

      • 0 avatar
        VW4motion

        Magicgti, I’m not here to educate the uneducated. But you might want to look up term “crony capitalism” before commenting. Ex: Carrier deal to keep contract with U.S. Government? This defines “crony capitalism”. Bottom line the cost will be trickled down to the consumer.

    • 0 avatar
      dukeisduke

      What crony capitalism? If anything, Trump is pi$$ing off the automakers, by forcing them to change their plans. There’s been plenty of crony capitalism in the last eight years, especially with regards to “green energy”, with my tax dollars being flushed down the toilet to support companies like Solyndra.

      • 0 avatar
        FreedMike

        Like it or not, cheap (or cheaper) foreign-made goods are a key underpinning of our economy. If prices go up, the losers will be lower-paid workers. There’s no question about that.

        So perhaps this particular poster doesn’t have a good grasp on what crony capitalism is, but he’s not the president, and the person who’s about to become president doesn’t seem to have much of a grasp on the concept of inflation and how it impacts poorer folks. And why would he? Billionaires could care less whether their new car costs a few hundred bucks more.

        Like Steph said…food for thought.

        • 0 avatar

          Operating on your theory, America circa 1950 was a penniless wasteland.

          Just because we’ve followed the Roman Empire into addiction to cheap foreign labor doesn’t mean we’ve no way back.

          • 0 avatar
            orenwolf

            I’ve said this before, but:

            The greatest action a politician could take, on either side of the border, would be to get people to stop buying the cheapest crap thing they can find at Walmart and instead pay attention to where their goods are coming from. Made-in-Canada/USA goods exist, you just need to look for them.

            Before you think this won’t matter, the whole reason the fast-food industry is going through a massive antibiotic-free transition right now isn’t because of government mandate or pressure, it’s because of customer demand. Enough folks complained about the crap ingredient sourcing that all the major fast food chains now have a plan to transition their suppliers to antibiotic/additive-free ingredients wherever possible.

            Two caveats:

            1 – This will undoubtedly raise prices, at least in the short to medium term. relief needs to be given to low-income families or else you’re squeezing them even more
            2 – this only works if country of origin laws/labelling laws are sane, and not hiding the true sources of products. (how about adding domestic parts percentages to vehicle stickers?)

            I buy:
            1 – locally, (most of my food, furniture, clothing) unless,
            2 – a much better product is available nationally (mmm Quebec maple syrup!), or
            3 – a much better product is available from North America (Thanks for the winter veggies, California!), or
            4 – a much better product is available internationally (i.e., my Mazda 6)

            Now, I’m lucky enough to be able to do that with disposable income, in situations where quality is roughly equivalent, but many folks aren’t, and it’s very backwards that it’s cheaper for them to buy foreign crap than buy domestic. However, if you make the solution Tariffs, then you just screw over anyone who couldn’t afford domestic, to begin with.

            And of course, many domestic products aren’t more expensive, to begin with. :)

          • 0 avatar
            dal20402

            “Operating on your theory, America circa 1950 was a penniless wasteland.”

            If we gave today’s consumers the goods consumers had in 1950, they’d feel like they were in a penniless wasteland.

            No consumer electronics of any sort. Media came from the radio, with just a few stations, or from a phonograph playing short 78 rpm records.

            Refrigerators were just trickling down from the upper middle class to everyone. It would be a few more years for washers and dryers to do the same.

            Poor households didn’t typically have a car.

            Air conditioning was still relatively rare.

            Most people only had a few clothes.

            Poorer rural areas didn’t have electricity or drinking water.

            That’s not to say foreign production changed all of this, but it did play a major role in making a lot of technologies affordable to everyone.

          • 0 avatar
            FreedMike

            “Made-in-Canada/USA goods exist, you just need to look for them.”

            Made-in-Canada/USA goods exist, you just need *to be able to afford them.*

            There, fixed it for you.

            That approach ignores that people buy cheap Chinese junk at Wal-Mart because that’s all they can afford. Same thing applies to the whole obesity epidemic – poor folks are overly prone to that because processed, less healthy foods tend to be cheaper. A lot of what they can afford isn’t healthy.

            Incomes need to rise, but what Trump’s doing isn’t going to make much of a dent in that.

          • 0 avatar
            ToddAtlasF1

            Sounds like our sustainable future.

          • 0 avatar
            Funky

            “If we gave today’s consumers the goods consumers had in 1950, they’d feel like they were in a penniless wasteland.”

            I’m not sure about this. All of my homes were built during the 1950s (all of which are in mostly original condition). None of them are lacking modern amenities. In fact, I’d argue that in regard to household appliances and amenities, it is surprising how little has changed for the better since that time. I accept and understand that electronics have changed (thus providing consumers with easier to see televisions which have more channels, entertaining gaming consoles, computers with internet access, etc.), but these consumer goods, I don’t believe have improved quality of life other than what is provided via distraction and detachment from reality. The fundamentals, ovens/ranges, central heating and cooling, clothes washers and dryers, dish washers, refrigerators, indoor plumbing, etc., I would argue, have changed, but not as much as one would expect, I think, over the course of the past 60 years.

            “Poorer rural areas didn’t have electricity or drinking water.”

            Maybe our community was not super poor. But, I am familiar with rural communities (because of my family’s origins and direct experience). And, I admit, for example, that up until 1997 one of my homes (located in a small rural town) had a shared party line telephone (shared with a few other homes on our road). But that was due to choice (stubbornness to change on the part of one of my relatives) rather than due to unavailability of the new service. When I took over the home I found the local phone company was very willing to install for me 6 telephone lines as well as run new fiber optic cabling down my road in order to accommodate my need (free of extra fees/charge to me). If there was a lack of amenities in a given rural environment in the 1950s (reference for example: http://www.economichistory.ca/pdfs/2014/lewisSevernini.pdf which states 95% of farms had electric service by 1955), I’d speculate, perhaps, many members of that community were reluctant to change to electricity, running water, and other amenities in their homes and community because of something like “if it isn’t broken, why fix it”. Not necessarily because the amenities were not available or were prohibitively expensive.

            “That’s not to say foreign production changed all of this, but it did play a major role in making a lot of technologies affordable to everyone” and “Made-in-Canada/USA goods exist, you just need *to be able to afford them.*”

            And, as an aside, I’d like to mention that I am one of an increasingly smaller number of folks who still remember what it was once like in our once prosperous small rural community. Through approximately the early 1980s, we had, in addition to farming, a couple automobile parts suppliers, factories which made small wooden pieces of furniture (like chairs and tables), a light bulb factory, a clay and brick works, a small armory, a clothes mill, and some mining. Only two remain: farming and some mining. I don’t know what is the solution to bring back the lost jobs. But, the point is that the items manufactured in our small town through the 1980s did not make cars, light bulbs, tables and chairs, bricks, and clothes too expensive for the consumers (folks were buying this stuff before the early 1980s just the same as they do today). And, I don’t know this for sure, but my guess is that not one of these items is less expensive for the consumer today than it was prior to the early 1980s.

      • 0 avatar
        heavy handle

        He’s not forcing them to do anything, other than issue a press release praising Trump.

        Ford cancelled Mexican plant expansions because they think the US market has peaked. Now they need to spin this as “keeping jobs in the US because of the enlightenment provided by our great leader,” even though jobs weren’t the issue that led them to make this move.

        We’re seeing this in all industries, not just automotive. The classic example is Softbank re-issuing a press release six months after the fact. They added a few “praise be to Trump,” but nothing else changed. The end-game for them is getting approval to take over T-Mobile (and raise rates), so everybody knows what they are up-to, except the grass roots who read these releases.

      • 0 avatar
        stuki

        “What crony capitalism?”

        Laws, rules and regulations distorting free choice about what to buy from whom, and what to produce and sell where for what. So that some economic actors (called cronies) get to benefit at the expense of others (called evil corporations, slave laborers and whatever else the less than literate call the prettier girls chosen in lieu of them, in order to feel less inadequate about their pathetic little selves.)

  • avatar
    dukeisduke

    With the picture of the Tacoma, I expected this article was going to be about the Ranger.

  • avatar
    FreedMike

    Asked this question before and I’ll ask it again: if importing vehicles from Mexico is bad, bad, bad, bad, then why isn’t Trump picking on GM, Chrysler and Toyota for making ***hundreds of thousands*** of pickups there?

    Ask yourself how many Trump stickers you see on (Mexican-made) Silverados, Sierras, and Ram trucks, and the answer becomes clear.

    In the end, what’s the job impact of a few thousand Cruze hatchbacks, versus ***hundreds of thousands*** of Silverados, Sierras, Ram pickups or Tacomas?

    And why no focus on Canadian-made best-sellers, like the Honda Civic, or the Toyota Corolla and RAV4?

    I didn’t vote for Trump, and wouldn’t have if you’d paid me, but that doesn’t mean I’m stupid enough to turn down the idea of more things being made domestically to flip the bird at the guy.

    But the political calculus here is just too damned obvious and simplistic, and unless Trump starts really confronting the automakers on the vast numbers of trucks they import from Mexico, this is just window dressing on his part. He knows that getting a few thousand Cruzes built here in the States won’t hack off GM too badly…but being forced to bring back Silverado production would hit them (and the people who buy Silverados, a large percentage of whom are probably Republicans) in their wallets. That would make GM (and FCA) go nuclear. Does he have the balls for that war? We will see. My money’s on “no.”

    • 0 avatar
      TDIandThen....

      On point, and the economic damage he’s already causing is impressive. I’ll bet he will be re-elected narrowly if the House doesn’t impeach him.

    • 0 avatar
      slance66

      Because those factories are already built.

      • 0 avatar
        FreedMike

        Ahhhh…so…losing a small number of jobs for a small number of cars that don’t sell particular well is where he draws the line in the sand.

        But when it’s thousands of jobs that are already gone, then c’est la vie.

        Good to know he’s serious.

        • 0 avatar
          Big Al from Oz

          Trump will inrease the cost of living to all Americans.

          The US needs to restructure its economy and stop blaming others.

          Lets start with the health and pharmacuetical industries. Massively expensive (most exspensive globally) with little more than developing nation results. Look at infant mortality and life expectancy.

          Cleaning up the US health industry will do more to protect jobs than worrying about cars imported from Mexico.

          I think the whining and snivelling needs to stop. The US is no longer such a huge powerhouse.

          Lots of the world has caught up to the US and now competition is frowned upon.

          If the US starts a trade war, it will not “win”.

          Its odd how I read all these people cry and sook about how they would buy American. If you did then you will have a standard of living closer to Mexico.

          Or, just stating we are Americans we will only buy ‘Murican vehicles and fnck every other purchase, they can be imported is short sighted and biased.

          The US is one of the few rich kids on the block, and rich kids don’t mow their lawns, wash dishes on CEO incomes. The work is done by “imported” labour.

          Countries are similar. Groe the fnck up and compete.

        • 0 avatar
          slance66

          This is maddening. He hasn’t done anything or even proposed any specific policy. He certainly has not nor could he target the policy at “small plants”.

          All that has happened is that Ford decided not to build a proposed plant because of uncertainty. Nobody is saying that any tariff, if it comes, won’t apply to existing plants. Of course it will.

  • avatar
    orenwolf

    I’m going to assume it won’t have teeth, but that doesn’t matter as long as the threat is looming. As for *why* it won’t have teeth? These sorts of Tariffs are complex issues:

    – Does it only affect “domestic” automakers? Because if you’re suddenly going to start tariffing foreign automakers, Germany and Japan (and their customers) are going to be a little pissed, not to mention Canadian manufacturing.
    – Ok, so if it’s only domestics, what defines domestic? is FCA a domestic automaker anymore?
    – Ok, so instead maybe it only affects jobs lost created elsewhere. Does that mean no more foreign investment in domestic manufacture, for fear that they’ll be penalized if things don’t work out?
    – Ok, so maybe then we grandfather existing foreign projects, just penalize “new” projects being foreign. Does that mean no one would dare bring those foreign vehicles domestic now, because of the new tariff burden on moving them out again? And would new entrants want to build domestically, given the threat of tariffs if they then move production foreign?

    It’s a thorny issue with lots of consequences for any decision. Ironically by just being a nebulous *threat* right now, it may have more power than actually trying to implement something. Once the rules exist, corporate beancounters will immediately begin looking for loopholes. They can’t do that right now. :)

  • avatar

    (Edited. No sense riling folks up).

    • 0 avatar
      FreedMike

      I say, rile ’em.

      Because Lord knows Twitter Duce isn’t gonna listen to a Hillary supporter like me. But if enough Republicans get after him for doing this kind of silly window dressing, maybe he’ll actually do something substantive.

  • avatar
    Corollaman

    It’s simple, if you want to sell your cars here, build them here. Period. Toyota, Subaru and Honda both did it back in the 80’s with much success. No good reason to change their business plans.

    • 0 avatar
      heavy handle

      That’s a two-way street, obviously. Every manufacturer should build plants in every country where they operate. Sell one car, build one factory!
      Why limit it to countries? Let’s do this at the county or city level. The obvious upside is that we are guaranteed massive economic growth once these new barriers are repealed. The downside should be obvious.

  • avatar
    Big Al from Oz

    So how many cars come from Canada?

    You can state Canadian income is high, but these ain’t ‘Murican jobs.

    So Trump picks on the weak? Great guy, especially if that’s how to make ‘Murica great.

  • avatar
    VW4motion

    D.trump now going after Toyota. http://mobile.reuters.com/article/idUSKBN14P27S?il=0

  • avatar
    stuki

    Well, employing the Top Goon Gang to force investment decisions to be made on the basis of what generalissimo feels tickles his ego, worked like a dream for Chavez…

    Less so for the rest of Venezuelans perhaps, but then again, they’re not the ones the cameras will be pointed at.

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