TOKYO: Toyota shares dropped more than three percent Friday after US President-elec t 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 have “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 US NO WAY! Build plant in US 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,” he said.
“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.