Toyota Motor Corp. is known for two things: It’s the largest Japanese automaker and one that is conservative in its messaging.
A “proclamation” by President Donald Trump spurred Toyota to lose the conservative messaging.
Trump said on May 17 that auto imports present a threat to U.S. national security. The president set a 180-day deadline for Japan and the European unit to negotiate accords to relieve that threat.
The same day, Toyota came out with a statement that made clear it didn’t care for the president’s words.
“Today’s proclamation sends a message to Toyota that our investments are not welcomed, and the contributions from each of our employees across America are not valued,” the company said. “Our operations and employees contribute significantly to the American way of life, the U.S. economy and are not a national security threat.”
Toyota has been in the U.S. market for six decades. Since the 1980s, it had built U.S. factories and opened research and development centers. The company’s moves including expanding an R&D complex in Michigan. It has 10 U.S. manufacturing plants and will open a joint venture plant with Mazda Motor Corp. in 2021.
Toyota isn’t alone. Honda Motor Co. and Nissan Motor Co. are among the Japanese automakers that have U.S. operations. Major Japanese auto suppliers followed their customers to the U.S.
Those automakers opened up those factories after the U.S. and Japan agreed in the early 1980s to so-called “voluntary” limits of imports into the U.S.. The idea was if the Japanese companies wanted to sell vehicles in this country, they should build vehicles in this country.
Since then, the Japanese companies have built vehicles in the U.S. with a vengeance. More recently, German automakers also opened up American factories.
Toyota made a point of revisiting that history.
“History has shown that limiting import vehicles and parts is counterproductive in creating jobs, stimulating the economy and influencing consumer buying habits,” Toyota said. “These artificial limitations would reduce consumer choice and impact all automakers since vehicle parts used in U.S. manufacturing are sourced from around the globe.”
The language wasn’t incendiary. But, by Toyota standards, it was more plain spoken.
The stakes involved in all this are huge. If the Trump administration ends up slapping tariffs on imported vehicles and parts it “could far outweigh the impact of any previous action on the U.S. automotive industry,” the Center for Automotive Research said in a February 2019 report. The Ann Arbor, Mich.-based group said that applied even though a pending U.S.-Mexico-Canada trade accord “will partially mitigate the effects of these tariffs.”
Quick reminder: Tariffs are paid by importers. The costs usually are passed along to customers. Tariffs are not paid by one country to another.
CAR said in that study that the worst-case scenario would result in job cuts, higher vehicle prices and reduced vehicle sales. That would occur just as vehicle deliveries are cooling off after four consecutive years of light-vehicle sales of 17 million or more.
General Motors Co. already has said five of its North American plants have no products allocated to them. One of them, a Lordstown, Ohio, plant that made small cars, has ceased operations while not being formally closed.
Toyota is a major automotive player in the U.S. Its new-style messaging may or may not have an impact at the White House.
But those who care about the auto industry or the broader manufacturing economy should take notice.
Bill Koenig, a senior editor at Manufacturing Engineering, has covered the auto industry since 1985.