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Toyota Has Strong Words For Trump

Politics / 75 Comments

We could be witnessing the makings of an "economic cold war."

Back around the time the automobile was first taking over the world, it became a point of national pride for a country to have a thriving auto industry. That hasn't changed much, but what has is the fact that car companies have become players that are deeply intertwined in the global market, a market that for the most part, has let the pipelines of goods, services, and money flow between nations without much friction.

That's all starting to change as China and the US, as well as a number of other counties, have entered into what's starting to be called an economic cold war. The latest shot in that cold war was fired off on May 17th when the US Department of Commerce under the Trump administration declared that auto imports from foreign companies are a threat to national security. As one might imagine, Toyota, a foreign company with a deep dependence on US customers but also a large investment in US manufacturing, was not happy to hear the news.

The Japanese automaker fired off a strongly-worded statement of its own, declaring that it sees the Department of Commerce's statement as a signal that the company's business is no longer welcome in the US. "Today's proclamation sends a message to Toyota," reads the company's press release. "That our investments aren't welcomed, and the contributions from each of our employees across America aren't valued."

At the same time, the DOC's argument cites its own reasons for what it perceives to be a threat from foreign automakers. It refers to the fact that domestic manufacturers' share of the US auto market has dwindled from 67% in 1985 to 22% in 2017. That decline, it asserts, has led research and development into new automotive technologies crucial to giving the US both an economic and defensive advantage, to go overseas. The DOC has therefore recommended that the US pursue negotiations to "adjust automotive imports" so that US automakers can help strengthen the domestic economy and bolster defense technologies.

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What those actions intended to adjust automotive imports are, we have yet to see. But Toyota's statement cites how its relationship with the US both strengthens the American economy and helps forward research into advanced automotive technologies since the company employs factory workers, has an extensive dealership network, and even has R&D centers in the US.

The argument between the US government and Toyota is tricky because both sides kind of have a point. Foreign auto markets, like Japan's, have systems that could be considered protectionist and make it hard for US automakers to do business abroad. At the same time, many foreign automakers have huge investments in US production and R&D, meaning that they also contribute to the US economy. The results of the battle between the US government and foreign automakers are yet to be seen, but whatever the outcome is, at least you can't say we're living in a boring time.