Trump’s Twitter Warning to Toyota Unsettles Japanese Carmakers

Trump’s Twitter Warning to Toyota Unsettles Japanese Carmakers

- in Automotive

Throughout his presidential campaign, Mr. Trump said he would punish American companies that moved manufacturing plants offshore. Soon after his election, he claimed credit for persuading Carrier, the air-conditioner company, to keep 1,000 jobs in Indiana that it had previously planned to move to Mexico. And he thanked Ford Motor on Twitter this week for abandoning plans to build a small-car assembly plant in Mexico that Mr. Trump had repeatedly criticized.

Mr. Trump’s Twitter post was not entirely accurate. He said Toyota would build a new Corolla factory in Baja, but the company is actually planning to build a new plant in Guanajuato, Mexico. (It already has a factory in Baja.) More significant, Toyota’s new plant in Mexico will not replace any of its 10 factories in the United States, where the company employs 136,000 people. The company said it had invested about $21.9 billion in the United States.

“I think being fair is not really in the playbook of the president-elect,” said Takuji Okubo, managing director and chief economist at Japan Macro Advisors.

Toyota builds Corollas in Cambridge, Ontario, as well as in Blue Springs, Miss. No workers in either of those plants will lose jobs, and when Toyota opens the new facility in Mexico, the company plans to shift the Canadian workers to making small RAV4 sport utility vehicles.

According to Hiroshige Seko, Japan’s minister of economy, trade and industry, Japanese carmakers manufactured about 3.86 million cars in the United States in 2015, up from 1.5 million in the 1990s, and employ about 1.5 million people.

In response to a question about Mr. Trump’s post at a meeting of the Japan Automobile Manufacturers Association, Akio Toyoda, president of Toyota, said the company would not change its manufacturing plans in Mexico.

“I don’t know yet exactly how, but, regardless of who becomes president, our business is about being good corporate citizens,” Mr. Toyoda said, according to a report in Japan Today. “And by becoming good corporate citizens, we are facing the same goal of making America strong. And so we will continue to do our best.”

Even though there are only two weeks left to the inauguration, some analysts suggested Mr. Trump might still be in campaign-promise mode.

“At the moment, it’s quite unclear whether Mr. Trump actually will push this policy after assuming office,” said Yoshio Tsukuda, founder of Tsukuda Mobility Research Institute, an auto industry research firm. “Right now we don’t know if he is just bluffing or serious.”

Akio Toyoda, president of Toyota.

Kiyoshi Ota/European Pressphoto Agency

But others said some of Mr. Trump’s words could spur changes on their own.

“I think the threat alone can actually force companies to behave in a more Trump way,” Mr. Okubo said. “So I think regardless of whether the border tax would actually be implemented, I think he will continue to use the threat to pressure companies.”

While Mr. Trump singled out Toyota on Thursday, analysts said that his views on trade clearly extended beyond a single company.

“The U.S. is no longer a champion of free trade as a nation,” wrote Genki Fujii, visiting professor at Takushoku University in Tokyo, in a column in Evening Fuji.

In comments to the Japanese broadcaster NHK, Takao Shindo, president of Nippon Steel & Sumitomo Metal Corporation, expressed concerns that Mr. Trump would repeal the North American Free Trade Agreement, which affects Japanese manufacturers with plants in Mexico shipping to the United States. These companies “will face a tough situation,” Mr. Shindo said.

Some analysts said that once Mr. Trump understood what Toyota was doing with its plants, he might back down.

“Toyota still is expanding local U.S. production in the long term,” said Takaki Nakanishi, an independent auto industry analyst in Tokyo. “Not at this point in time, because the U.S. market is near saturation, but over the long term I think there is more capacity to expand the Mississippi plant.”

“Job growth is coming in the long term” in the United States, he added. “That’s why I think Donald is misunderstanding Toyota’s intention.”

But Mr. Nakanishi, who was on his way to the annual North American International Auto Show in Detroit, said he was not surprised by Mr. Trump’s rhetoric.

“He wants to protect jobs for the United States,” he said. “So regardless of the origin of the company, he is just trying to do his job.”

Japan has already been rattled by Mr. Trump’s election given his campaign criticism of Japanese trade barriers and the cost of United States military support. Prime Minister Abe was the first world leader to land a meeting with the president-elect, and he is seeking a follow-up meeting shortly after the inauguration. His advisers have also been meeting with members of Congress and Mr. Trump’s transition team to confirm the importance of the alliance between the two countries.

Some economists fear that Mr. Trump could return to the trade wars of the 1980s with his policies. Jun Saito, a senior research fellow at the Japan Center for Economic Research, said economic conditions were starting to resemble those of the United States in the 1980s, when the dollar was stronger and the country had a large trade deficit with Japan.

“That was the background for the trade friction between Japan and the United States,” Mr. Saito said. Japan’s trade surplus with the United States — about 7.2 trillion yen, or about $62 billion, in 2015 — is smaller than China’s, but it could nevertheless draw Mr. Trump’s ire. “I think we have to be very careful. We can’t be too optimistic.”

Mr. Okubo of Japan Macro Advisors said Mr. Trump might also accuse the Bank of Japan of currency manipulation, given that in inflation-adjusted terms, the yen is at a 40-year low.

“I think this could be just the beginning,” Mr. Okubo said. “I think the Japanese government has to be really careful not to act in a way that could be interpreted as manipulating the exchange rate.”

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