President-elect Donald Trump is threatening to tax Toyota Motor (TM) if it builds Corolla cars destined for the U.S. market at a factory in Mexico.
“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,” he wrote on Twitter.
The Japanese automaker’s shares immediately dipped after Mr. Trump’s tweet. As of 3:15 p.m. Eastern time, its American depositary receipt, which trades on the New York Stock Exchange, was down 59 cents, or 0.5 percent, to $120.60.
Trump erred in saying that the plant expected to build Corollas will be situated in Baja, California. The $1 billion factory, which is scheduled to open in 2019, is located in Guanajuato in north-central Mexico. Once complete, it will produce some 200,000 vehicles per year and provide 2,000 jobs in the region, the company has said. The plant will become Toyota’s 15th manufacturing facility in Mexico.
In a response to the tweet, Toyota defended its practice of making cars in Mexico, while saying in a statement that the company “has been part of the cultural fabric in the U.S. for nearly 60 years.” The automaker said that production volume or employment in the U.S. will not decline because of its planned facility in Guanajuato,, which it announced in 2015. It also highlighted investment totaling $700 million in U.S. manufacturing plants in Alabama, Indiana, Kentucky and West Virginia.
“With more than $21.9 billion direct investment in the U.S., 10 manufacturing facilities, 1,500 dealerships and 136,000 employees, Toyota looks forward to collaborating with the Trump administration to serve in the best interests of consumers and the automotive industry,” Toyota said.
As of 2015, Toyota made more than 2 million vehicles in North America, with most of that production in the U.S. and Canada, according to the automaker.
In fact, the automaker makes the vast majority Cruzes in Lordstown, Ohio, near Cleveland.
Last year, Mr. Trump threatened to tax Ford (F) if it moved production of the compact Focus to Mexico. The U.S. auto giant announced Tuesday that it is canceling plans for a $1.6 billion plant in Mexico and investing $700 million in expanding a plant in Michigan to build electric and self-driving cars. The investment in the Flat Rock Assembly Plant, south of Detroit, would create 700 direct new jobs, the company said.
Other companies have drawn the president-elect’s ire. In December, he tweeted that the costs of the F-35 fighter jet were “out of control,” sending the stock of its maker, Lockheed Martin (LMT), down 4.4 percent. That same month, Mr. Trump used nearly identical language to tweet about the cost of Boeing’s 747 Air Force One, sending Boeing’s stock down 1 percent.