The head of Toyota North America warned Friday that the tariffs President Donald Trump has threatened to impose on foreign vehicles would make it hard for the company to follow through on an additional $750 million investment in US plants that it announced this week.
“I think it makes it difficult … because it’s going to impact the overall industry,” Jim Lentz, CEO of Toyota North America, told reporters after an event with the Economic Club of Washington DC.
The carmaker announced on Thursday that it plans to expand its US operations, adding hundreds of new jobs in Alabama, Tennessee, and West Virginia.
But Trump is considering adding tariffs to foreign vehicles and vehicle parts. Last month, the Commerce Department delivered a report on whether imports pose a threat to national security, but those findings have not been made public. Trump has about two more months to decide whether to act on the recommendations.
The vehicles Toyota makes abroad and sells in the United States could be hit with tariffs and become more expensive for American consumers if Trump imposes the new tariffs.
The company makes about half of the cars it sells to Americans in the United States, where it has 10 plants. But Trump could decide to put tariffs on imported parts, too, which could raise the price of manufacturing in the United States, even for American companies like General Motors and Ford.
Nearly every corner of the auto industry — vehicle makers, part manufacturers, and dealers — have lined up against the proposed tariffs. Automakers say the tariffs Trump imposed on steel and aluminum last year have already driven up the cost of making a vehicle in the United States.
“I am confident the administration wants to do what’s best for the American people and for the American economy. If they really look at the impact it would have — the impact on reduced sales and reduced production and reduced employment — I’m confident they’ll make the right decision,” Lentz said.
The President, however, loves to dangle the threat of tariffs in international negotiations. He’s imposed duties on $250 billion of Chinese goods while negotiating with Beijing and last month indicated he might impose auto tariffs if he isn’t happy about trade talks with the European Union — suggesting the findings in the national security report wouldn’t play a major role in his decision-making process.
Also speaking at the Economic Club event in Washington, Toyota Motor Corporation President Akio Toyoda said he did not see how Japanese-made cars pose a threat to America’s national security.
“I just don’t know why they call it a national security threat. That really makes me feel sad. I hope this kind of conversation will go away,” Toyoda said.
Trump applauded Toyota’s announcement Thursday to expand investment at five of its US plants, expecting to create 586 new jobs. He claimed his new trade deal with Canada and the United States, known as the United States-Mexico-Canada Agreement, encouraged the move.
In a tweet, the President said: “Congratulations @Toyota! BIG NEWS for U.S. Auto Workers! The USMCA is already fixing the broken NAFTA deal.”
But on Friday, Toyota’s Lentz said the company’s decision to expand its investment in the United States by about 30% over the next few years was driven by demand, not trade policy.
“Do we have our eye on trade? We do. But these investments are not being driven by trade,” he said.
Instead, the company is shifting to meet more consumer demand for sports utility vehicles rather than passenger cars.
The USMCA still hasn’t been ratified by Congress, where lawmakers on both sides have raised concerns. As proposed, it does include provisions that would put more pressure on automakers to ramp up production in the United States.