Donald Trump threatened Toyota on Thursday with a “big border tax” if it didn’t build cars meant for the US within the states, the latest in a series of attacks on car manufacturers and the first time since his election that he has threatened a foreign company.
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.
— Donald J. Trump (@realDonaldTrump) January 5, 2017
The $1bn plant will be located Guanajuato, a state in central Mexico, not Baja California, as Trump tweeted. Toyota plans to increase capacity at an existing plant in Tijuana, Baja California, that makes Tacoma pickup trucks.
Toyota plans to manufacture 200,000 Corollas at the new plant. The Corolla is the second bestselling compact car in the US behind fellow Japanese manufacturer Honda’s Civic.
Trump’s latest threat follows a similar one against General Motors over its plans to manufacture compact cars south of the border for US export.
Jorge Guajardo, the former Mexican ambassador to China, immediately lit into Trump: “If you think intentionally wrecking your neighbor’s economy is what’s going to bring peace and stability to US you’re in for a big surprise,” he tweeted.
Trump, who was elected on a promise to restore US manufacturing jobs, has spent the week instructing automakers to move their compact car production out of Mexico. On Tuesday he told GM that it too must weigh his opinion favorably against the financial efficiencies offered on foreign soil. “Make in U.S.A. or pay big border tax!” Trump tweeted.
Last month Trump threatened “retribution” against companies outsourcing factory work to foreign facilities. “There will be a tax on our soon to be strong border of 35% for these companies,” he tweeted, naming car and air conditioner manufacturers in the same series of remarks.
In recent weeks, Trump also threatened aerospace firms Boeing and Lockheed-Martin, both of which rely heavily on government contracts for multibillion-dollar revenues. Those threats, also tweeted, shocked shareholders and caused stock prices to plummet.
But threatening car companies with taxation has barely caused the market to blink. The US president cannot personally levy taxes; that duty falls to state legislatures and the US House of Representatives, which holds the “power of the purse”.
Trump’s campaign platform heavily criticized companies for moving labor out of the US, but thus far his favored method of dealing with corporations has been rewards via back channels, rather than punishment. Instead of taxing air conditioner company Carrier more for exporting jobs, however, Trump and Indiana governor Mike Pence offered the Indiana-based company $7m in tax breaks to keep 700 jobs.
