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Trump hits Toyota in latest attack against car makers and Mexico

US President-elect Donald Trump has targeted Toyota, threatening to impose a hefty fee on the world’s largest car maker if it builds its Corolla cars for the US market at a plant in Mexico.


It was Trump’s latest broadside against car makers building cars in Mexico and the first against a non-US car maker.

The president-elect’s attacks on investments by companies in Mexico have cast a shadow over cross-border production networks central to more than $583 billion a year in trade between the two countries.

The value of the Mexican peso has skidded amid fears that Trump’s policies would harm Latin America’s second-biggest economy - and declined again yesterday after Trump’s tweet.

Toyota, which announced plans to build a new Mexican facility in Guanajuato in April 2015, said it would not take away from US employment.

"Toyota looks forward to collaborating with the Trump administration to serve in the best interests of consumers and the automotive industry," Toyota spokesman Scott Vazin said.

Trump’s tweet confuses Toyota’s existing Baja plant with the planned $1 billion plant in Guanajuato, where construction got under way in November. A Trump spokeswoman did not return a request seeking additional comment.

Baja produces around 100,000 pickup trucks and truck beds annually.

The Guanajuato plant will build Corollas and have an annual capacity of 200,000 when it comes online in 2019, shifting production of the small car from Canada.

Toyota President Akio Toyoda said in Japan yesterday that the company has no immediate plans to curb production in Mexico, preferring to wait until after Trump’s January 20 inauguration before deciding whether to make any changes.

"We will consider our option as we see what policies the incoming president adopts," Toyoda said at an industry gathering in Tokyo before Trump’s tweet, when asked whether his company was considering any changes to a production plant the automaker was building in Mexico.

Car makers in the US have been slammed by Trump for building cars in lower-cost factories south of the border, which he said costs American jobs.

Pressure to curb that production intensified this week after Ford scrapped plans to build a $1.6 billion assembly plant in Mexico after Trump harshly criticised the investment.

Ford, however, still plans to shift production of small cars to Mexico from Michigan, even as it uses $700m from the planned Mexico investment to expand its operations in Flat Rock, Michigan, and add 700 jobs.

During the campaign, Trump criticised barriers to US car exports to Japan and said the US government did not do enough to open the market to more American-made vehicles.

Toyota has extensive US investments, operates 10 US plants in eight states and builds more than 1.3 million vehicles in the US annually.

Between 1994 and 2013, US auto factory jobs dropped by a third while jobs in Mexico rose almost five-fold over the same period as lower-wage production boomed.

Mexico now accounts for 20% of all vehicle production in North America and has attracted more than $24 billion in auto investment since 2010, according to the Center for Automotive Research.

Based on current investment plans, Mexico’s auto production capacity will grow by another 50% over the next five years, according to the centre, which draws funding from the auto industry.

It said Toyota imported fewer vehicles from Mexico than any other major automaker building cars there last year.

Detroit’s Big Three automakers collectively exported more than 1.1 million vehicles to the US from Mexico in 2016, while Toyota sent about 47,000 Mexican-made vehicles to the US.

Trump has also said General Motors could become subject to tariffs on Mexico-made cars for the US market, and that he would like to renegotiate terms of the North American Free Trade Agreement signed with Canada and Mexico, or scrap it altogether.

Trump criticised GM for importing Mexican-made versions of the Chevrolet Cruze, as the car maker is laying off 1,200 workers in Ohio this month who assemble the car.

Jimirasire

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