Tokyo: Toyota shares slumped on Friday as Donald Trump threatened punitive tariffs over its new vehicle plant in Mexico, triggering a staunch defence from Japan’s government which said its auto sector had made huge contributions to the US economy.
The world’s largest automaker became the latest company to face Trump’s wrath when he tweeted “NO WAY” to the company’s plans for a new manufacturing plant in Mexico.
US President-elect Trump – who takes office on January 20 – has embraced the unorthodox tactic of using Twitter to intervene publicly in the affairs of major companies.
The 70-year-old Republican property mogul campaigned in part on bringing manufacturing jobs back to America’s heartland and vowing to crack down on allegedly unfair trade practices.
“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 on Thursday.
Shares in Toyota took a hit in early trading just hours after the tweet, declining as much as 3.11 percent before paring losses to close 1.68 per cent lower at 6,930 yen.
In November, Toyota celebrated the groundbreaking for the USD 1 billion plant in Guanajuato, in central Mexico – not, as Trump said, in Baja California state that borders the US. The company already has a factory making Tacoma pickups in
Earlier this week, Ford scuttled a plan to build a new factory in Mexico following criticism from Trump and shortly after he attacked General Motors for importing Mexican-made cars into the US.
GM says only a small number of such cars actually sold in the US are built in Mexico.
Shares of other Japanese automakers also sagged, with Nissan declining 2.20 per cent to 1,173 yen and Honda down 1.90 per cent to 3,501 yen.
Following the tweet, Japan’s government rose to the industry’s defence, with trade minister Hiroshige Seko saying that Japanese automakers have “contributed to (creating) 1.5 million jobs in the United States.”
Seko also stressed in comments to reporters that Trump’s administration needed to understand that the Japanese auto industry “has greatly contributed to the US economy”.
Toyota meanwhile responded with a conciliatory statement, saying it looked forward to “collaborating” with Trump’s government and stressed that the new plant would have no negative effect on its US factories.
“Production volume or employment in the US will not decrease as a result of our new plant in Guanajuato, Mexico announced in April 2015,” the company said. Toyota employs 136,000 Americans and maintains 10 manufacturing facilities in the US.