Trump's Battle With Toyota Might Impact Another Company Even More

Politics

Toyota might not have the most to lose from Trump's policies.

President-elect Donal Trump has been ruffling a lot of feathers in the auto industry. Trump wants to change the way carmakers do business in the US, and has even threatened companies that work in Mexico. Just this week, Trump targeted Toyota via Twitter for building US-bound Corollas in Mexico. We know that Trump wants to implement a large border tax for Mexican-built cars imported to the US, but Toyota, GM and Ford would not be the most affected companies. In fact, the second largest Japanese automaker would be hit hardest.

Nissan established its first Mexican plant 50 years ago, and now builds over 800,000 cars there according to Reuters. Nissan currently builds the Sentra and Versa in Mexico, and exports roughly half of these cars to the US. Mexican-built cars make up around 25 percent of Nissan's US sales, compared to around 30 percent for Mazda and less than 10 percent for Toyota and Honda. The Japanese auto industry as a whole produced 1.4 million cars in Mexico last year, which is 40 percent of the country's total output. This number will increase to 1.9 million cars by 2019 according to the Japan External Trade Organization.

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This is still far less than the number of Japanese cars built in the US last year which was around 4 million cars. Automakers are quick to build cars in Mexico because of affordable labor costs and the North American Free Trade Agreement, which allows free trade between the US, Mexico and Canada. Trump wants to renegotiate NAFTA and impose 35 percent tariffs on cars imported from Mexico to the US. Nissan and Renault CEO Carlos Ghosn told Reuters he was watching Trump's policies very closely and that he doesn't want to "preempt or try to guess what’s going to happen." It will be interesting to see how the future of the auto industry in the US could be changed forever by the next president.

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