There's a trade war going on right now in the automotive industry, and it's one that could disrupt the global market for years to come. The United States government has made amendments to Proclamation 9705, particularly section 232, and automakers have been vocal about it, particularly, Toyota.
But what is Proclamation 9705, section 232?
It is, essentially, tariffs on steel being imported to the United States, dubbed the Trade Expansion Act of 1962. But why is Toyota not pleased to point that they have put out a strong-worded statement about it? The answer lies in Section 232, particularly the response of US Secretary of State, Mike Pompeo.
According to him, “Steel articles are being imported into the United States in such quantities and under such circumstances as to threaten to impair the national security of the United States”. President Donald Trump agreed with Pompeo's sentiments. By that, they mean import automakers (Asian, European) have been eroding American automaker sales since the 1980's. To bring back more Americans in American cars, the US Government is keen on imposing tariffs of as much as 25 percent on imported vehicles, and parts, a big blow to foreign automakers.
Toyota did not mince words in response to the statement, particularly to the 'threat to national security' bit. "Today’s proclamation sends a message to Toyota that our investments are not welcomed, and the contributions from each of our employees across America are not valued. Almost every American has a Toyota story and we are very proud of the fact that over 36 million Toyota and Lexus vehicles are still on U.S. roads today. Our operations and employees contribute significantly to the American way of life, the U.S. economy and are not a national security threat."
Surely, a humble Toyota Camry, which is America's best-selling sedan won't be a threat to a nation, although it is a 'threat' to its American competitors such as the Ford Fusion and Chevrolet Malibu. Ironically, the Ford Fusion isn't even made in the US, but rather, Mexico. Even more ironic is the fact that the Camry sold over there is made in Kentucky, so it is perhaps understandable why Toyota hitting back hard at the White House. Plus, they have made even more investments in the US, which has amounted to over $10 billion.
The additional tariffs could also spell higher prices for American Toyota products, despite being built on US soil. Yes, there are exemptions, but it's steel coming from Argentina, Australia, Brazil, Canada, Mexico, South Korea, and the member countries of the European Union. Toyota, being Japanese, is not included in the exemption.