Toyota shares drop after targeted by Trump over Mexico manufactur
- Author: Essie Rivera Jan 08, 2017,
Jan 08, 2017, 0:23
US President-elect Donald Trump took to Twitter on Thursday (5 January) to vent his anger over Toyota's plans to build a new auto manufacturing plant in Mexico that would make cars for the US market.
Donald Trump has tweeted that auto company Toyota will face hefty tariffs in America on cars built in Mexico.
Trump tweeted Thursday: "Toyota Motor said will build a new plant in Baja, Mexico, to build Corolla cars for U.S". Honda fell more than 2 percent before paring losses, while Nissan also shed 2 percent, underperforming the broad Topix index.
The president-elect threatened in a Twitter post to take action if the Japanese firm makes its Corolla cars for the United States market at a plant in the country's southern neighbour.
The president-elect's tweet appeared to confuse Toyota's existing plant in Baja California with the planned site in Guanajuato.
In a statement on its website Thursday, Toyota pointed out, somewhat defensively, that it was the "smallest importer of vehicles from Mexico to the U.S.in 2016".
The automaker said it has invested over $21.9 billion in its USA operations, including 10 manufacturing facilities, 1,500 dealerships and 136,000 employees.
"Throughout his campaign and now, after his election, Trump has made it crystal clear that he would prefer that manufactured goods made for Americans be manufactured in the United States", Nerad said.
On Tuesday, Ford announced it had scrapped plans to build a new $1.6 billion small-car factory in San Luis Potosi, Mexico. The Guanajuato plant is taking over Corolla production from a facility in Ontario, Canada.
Ford, however, still plans to shift production of small cars to Mexico from MI.
Toyota announced in April 205 that it was shifting production of Corollas from its plant in Cambridge to Mexico. While it was the first time Trump targeted GM in its tweet, Ford Motors Company has been facing the heat for a while, after which Ford made a decision to call off its plans to build a plant in Mexico.
"His government is going to try to get more companies out of Mexico to manufacture in the United States, especially in labor depressed states such as Michigan", Jose Alberto Moreno, stock market analyst and investment strategy adviser, said.
Toyota's exposure to Mexico is limited, Mr Kishimoto said, adding that even an "extreme case" tariff of 20 per cent would hit its operating profit by around 6 per cent. Mr Trump has threatened a 35 per cent tariff on cars from Mexico.