Donald Trump |
Toyota shares dropped more than three percent Friday
after US President-elect, Donald Trump,
threatened the carmaker with import taxes over a new vehicle plant in Mexico,
also prompting an objection from the Japanese government.
Shares in the Japanese automaker fell as much as 3.11
percent after the opening bell before paring losses to move 2.04 percent lower
at 6,905 yen at the break. Other automakers also sagged, with Nissan declining
1.79 percent to 1,178 yen and Honda down 1.54 percent to 3,514 yen by the
break. 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: “Japanese
auto industry has contributed to creating 1.5 million jobs in the United
States.” Seko stressed the need for the new US administration to
understand that the Japanese auto industry “has greatly contributed to the US
economy” in comments to reporters.
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 United States, 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.
As well as the Trump salvo, Toyota shares were also
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
115.47 yen on Friday morning, compared with 115.89 yen in Tokyo on Thursday and
sharply lower from 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 house told AFP. “Japanese
automakers that are most vulnerable to (such a political risk) over production
in Mexico is Nissan by number of vehicles, and Mazda by the value of profits. 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: “We
look 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.” The company employs 136,000 Americans and maintains 10
manufacturing facilities in the United States. (Guardian)
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