Toyota was high on Trump. Then came his tariff threats

Japanese automakers, initially optimistic about some of President Trump’s policies, are reckoning with potentially devastating US taxes on foreign-made cars, writes River Akira Davis from Tokyo

- River Akira Davis from Tokyo

Before the US election last November, Toyota Motor and other Japanese automakers thought a second Trump administration could be good for them.

President Trump had campaigned on dismantling policies aimed at swiftly accelerating the auto industry’s shift away from fossil fuels and to electric vehicles — directives that Toyota and other leading manufacturers of petrol and hybrid petrol-electric cars had also long opposed.

Toyota donated $1 million to Trump’s inaugural fund in January, and attended at the company’s leadership meeting in Dallas that month, amid it was brimming with Trump cheer.

But as Trump’s agenda has taken shape, much of that optimism has turned to alarm.

In February, the administration signed an executive order imposing 25% tariffs on goods from Mexico and Canada, where Toyota and other Japanese companies assemble many of the cars they sell in the United States.

The administration has said that on April 2 it will announce “reciprocal tariffs” on countries that run large trade surpluses with the United States — a move widely expected to affect Japan and its cars.

Japan is one of the world’s largest automobile exporters, and the United States is the biggest market for companies like Toyota, Honda, Nissan, Mazda and Subaru. So, as the tariff deadline approaches, Japan is now preparing for a blow that could be devastating not only to the profits of the nation’s automakers but to its overall economy.

With Japan’s economy already stifled by inflation, some economists estimate that if Trump’s automotive tariffs are implemented as threatened, they could wipe out approximately 10% of potential economic growth this year.