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Make Me Smart with Kai and Molly

Trump’s Toyota Twitter feud: does it matter?

Lewis Wallace Jan 6, 2017
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Toyota is the latest company whose stock took a hit after the president-elect threatened to punish the carmaker for its plans to build Corollas in Mexico. Toyota’s planning to move production out of Canada, not the U.S. In any case, that makes Toyota his first foreign target for a tweet about tariffs.

Michelle Krebs, a senior analyst at AutoTrader, said when car companies consider where to put a factory, they have to think about costs, supply chain, where consumers are — and now, apparently, Trump tweets.

“They’re having to add this layer of how does this play politically,” Krebs said.

Toyota is defending itself, saying it’s a good corporate citizen in the U.S. It has 10 factories and 136,000 employees here.

Trump’s idea of imposing a big tariff on cars made elsewhere has some precedent: in the ’80s, the Reagan administration put a quota on Japanese vehicle imports. Clifford Winston with the Brookings Institution said Honda, Toyota and Nissan did eventually build new factories in the U.S., but car prices almost immediately went up.

“The strategy backfired. Because employment was reduced, not increased,” Winston said.

Consumers paid the price, and so did workers, as the U.S. saw cuts in productivity and jobs.

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