Toyota shares drop after Trump threat on Mexico plant
Toyota shares fell Friday after US President-elect Donald Trump threatened the carmaker with tariffs over a new vehicle plant in Mexico, also prompting an objection from the Japanese government.
Shares in the Japanese automaker, which declined as much as 3.11 percent after the opening bell, later paring losses to close 1.68 percent lower at 6,930 yen.
Other automakers also sagged, with Nissan declining 2.20 percent to 1,173 yen and Honda down 1.90 percent to 3,501 yen.
Toyota became the latest company to face Trump’s wrath when he tweeted “NO WAY” to the firm’s plans for a new manufacturing plant in Mexico.
Referring to the statement, Japanese trade minister Hiroshige Seko said the Japanese auto industry has “contributed to (creating) 1.5 million jobs in the United States.”
Seko also stressed in his comments to reporters the need for the new US administration to understand that the Japanese auto industry “has greatly contributed to the US economy”.
Trump — who takes office on January 20 — campaigned in part on bringing manufacturing jobs back to America’s heartland and vowing to address alleged unfair trade practices he said have hurt the US.
“Toyota Motor said will build a new plant in Baja, Mexico, to build Corolla cars for U.S. NO WAY! Build plant in U.S. or pay big border tax,” Trump said.
Toyota already has a factory in Mexico’s Baja California state that borders the US making Tacoma pickups. Trump mistakenly said in the tweet that a Corolla plant would be built in Baja.
Toyota has said it will build a new plant in another region in Mexico, which is expected to begin production in 2019.
– ‘Adapt to new rules’ –
Earlier this week, Ford scuttled a plan to build a new factory in Mexico following criticism from the president-elect and just hours after Trump attacked General Motors for importing Mexican-made cars into the US.
Nissan chief executive Carlos Ghosn, meanwhile, said after Trump’s tweet that “all carmakers are going to be watching very carefully… what are going to be the North American rules” following Trump’s swearing in.
“If NAFTA were to change, we would obviously adapt to the new rules,” Ghosn told reporters at a trade show in Las Vegas, referring to the North American Free Trade Agreement between the United States, Mexico and Canada.
As well as the Trump salvo, Toyota shares were under pressure as exporters across the board were hit with a fall in the dollar against the yen, which can damage their profitability.
The US currency stood at 115.85 yen on Friday, compared with 115.89 yen in Tokyo on Thursday and sharply lower from the 118.12 yen seen in Tokyo on Wednesday.
“Today’s market reaction is chiefly due to forex, rather than Trump’s comment on Mexico,” an analyst at a Japanese brokerage told AFP.
“As Toyota has production bases across the world including in the United States, like other global companies do, it would be able to adapt flexibly” to Trump’s potential policy shakeup, he said.
In a statement issued after the tweet, Toyota said it looked forward to “collaborating with the Trump administration” to serve consumer and industry interests.
“Production volume or employment in the US will not decrease as a result of our new plant in Guanajuato, Mexico announced in April 2015,” it said.
The company employs 136,000 Americans and maintains 10 manufacturing facilities in the United States.