While Toyota has increased local production in the US to more than half of sales in the country, it still relies on imports of key vehicle parts and models — to the tune of some 1.2 million cars a year. The White House has noticed, with Trump calling out the Toyota City-based automaker by name during his contentious Liberation Day speech in the Rose Garden on April 2. He complained about Toyota’s “one million foreign made automobiles” sold in the US.
The huge tariff hit reflects the company’s decision to hold the line on sticker prices at US dealers and production volumes at its 11 American factories amid the start of bilateral trade negotiations between the US and Japan. Those talks started in February and it’s unclear when they will conclude with a deal.
“When it comes to tariffs, the details are still incredibly fluid,” Toyota’s Chief Executive Officer, Koji Sato, said last week after releasing the latest financial results. “It’s difficult to take steps or measure the impact.”
Japan’s chief trade negotiator, Ryosei Akazawa, said on April 30 that one unnamed Japanese automaker is currently losing around $1 million per hour from the tariffs, citing a calculation made by an unidentified corporate executive. A Japanese government official on Friday declined to provide more specifics. But that rate of loss isn’t too far off the mark from the $1.2 billion hit Toyota is projecting based on 730 hours per month. Representatives for Toyota also didn’t respond to a request for comment.
Akazawa has expressed hope that an agreement could be reached in June with the next round of negotiations taking place in late May.
“The hurdle is high for Japan to get auto tariffs lowered” on exports to the US, said Hiroshi Namioka, chief strategist at T&D Asset Management Co. “At the same time, the auto industry is too important for Japan to simply go along with what the US wants.”
The company’s best-sellers in the US — the RAV4 hybrid crossover and Corolla compact sedan — are assembled at factories in Kentucky and Mississippi. But gas-only RAV4s are imported from Canada and the plug-in hybrid comes from Japan. Corolla models variants like the sporty GR, practical hatchback and gas-electric hybrid also carry made-in-Japan labels.
That exposure puts Toyota in the crosshairs of the Trump administration and means the automaker has a lot riding on the outcome of the US-Japan trade negotiations.
