Donald Trump just threatened Toyota - but it looks like he got the facts wrong

President-elect warns Japanese automaker it will face hefty border tax in latest round of tweets

President-elect Donald Trump threatened to impose a 'big border tax' on General Motors in a tweet on January 3 (Reuters)

President-elect Donald Trump continued his Twitter tirade against the auto industry on Thursday, slamming Toyota for investing in Mexico but appearing to misstate key details of the company’s operations.

Trump warned the Japanese carmaker over Twitter that it could face hefty fines for building a plant in Baja, Mexico, to sell the popular Corolla sedan to American consumers. But Trump’s tweet looks to be incorrect: Toyota’s factory in Baja assembles Tacoma trucks, according to the automaker. A new plant in Guanajuato, Mexico, will manufacture Corollas.

That factory broke ground in November, and production is expected to begin in 2019. The work is being shifted to the plant from a facility in Canada. In a statement Thursday, Toyota said that there is no change in employment and production in the United States as a result of the new operations.

“Toyota has been part of the cultural fabric in the US for nearly 60 years,” the company said. “Toyota looks forward to collaborating with the Trump administration to serve in the best interests of consumers and the automotive industry.”

Trump has repeatedly threatened to slap American manufacturers with a border tax if they move jobs and production out of the country and then sell goods back to the United States. But this appears to be the first time that Trump has warned that a foreign company could face similar repercussions, and his tax proposal does not lay out a framework for how a border tax might be implemented.

Trade experts said it is unlikely that the White House has the power to punish individual companies through a border tax, though there is debate over whether Trump could unilaterally fulfil his campaign promises to levy blanket double-digit tariffs on imports from Mexico and China. Generally, that authority lies with Congress, and House Speaker Paul D. Ryan (R-Wis.) voiced staunch opposition to such measures earlier this week.

“No, we’re not going to be raising tariffs,” he told conservative talk show host Hugh Hewitt on Wednesday. “We think tax reform is the better way of addressing imbalances, levelling the playing field without starting trade wars, without having the adverse effects that you get with protectionism or trade wars.”

Trump’s tweet came shortly after Toyota Motor President Akio Toyoda told reporters that his company is “oriented in the same direction” as the United States, according to the Wall Street Journal. Toyota said it has invested nearly $22 billion into its operations here and employs about 136,000 workers.

Earlier this week, Trump lashed out at General Motors on Twitter for assembling some of its Chevrolet Cruzes in Mexico. The company said that nearly all of the 190,000 Cruze models sold in the United States last year were made at a factory in Lordstown, Ohio. GM makes Cruze hatchbacks at a factory in Mexico and shipped 4,500 across the border.

On Twitter this week, Trump also celebrated a decision by Ford to cancel a new $1.6 billion plant in Mexico to build the Focus - a business move that he had frequently criticised on the campaign trail. But Ford said the work will move instead to an existing factory in Mexico, a decision driven by declining demand for small cars in the United States. The company said it would use roughly half the money saved to create 700 US jobs and invest in its factories in Michigan and Illinois.

“If American companies stay in the United States and continue to hire American workers to grow our manufacturing base, then there is no tariff,” Trump spokesman Sean Spicer said Thursday.

Trump’s protectionist stance runs counter to Republicans’ historic embrace of free trade, and even Trump’s top advisers appear to be conflicted over the merits of globalisation. His choice to lead the National Economic Council, Gary Cohn, is a Wall Street veteran with extensive international experience. But the head of the newly established National Trade Council, Peter Navarro, has been an outspoken critic of China. Robert Lighthizer, Trump’s pick to lead US trade negotiations, has also been sceptical of free trade’s benefits.

In a statement following Lighthizer’s nomination this week, Senator Ron Wyden (D-Ore.), ranking member of the finance committee, called for clarity on the new White House’s policies.

“It is well past time for the incoming administration to explain its approach toward international trade beyond 140 characters,” he said.

The Washington Post