Toyota introduced final week it might do one thing different automakers have been reluctant to do – shift some production from Mexico to the United States.
The Japanese automaker will quickly construct half of its best-selling midsize Tacoma pickups at an expanded plant in San Antonio, the place it already builds the Tundra full-size pickup and Sequoia SUV. But it’s going to additionally proceed to construct Tacomas in Mexico.
President Donald Trump heralded the shift to US soil, calling it “a really big deal” and proof of “Tariffs at work!”
Toyota didn’t cite tariff coverage as the catalyst.
“While we are impacted by evolving trade policies, our investments are multi-decade decisions based on broader strategic goals,” the firm advised NCS.
And greater than a year after the Trump administration introduced sweeping auto tariffs to spur building of new American factories, Toyota’s transfer is the exception, not the rule.
Few automakers have introduced plans to transfer production to the United States. Most automakers would moderately pay tariffs than spend billions to construct new amenities – and the product strains that are coming to the US are moving into present factories.
Forty-six p.c of the automobiles bought by US shoppers final year had been imported, in accordance to Mobility Global, down solely barely from 47.7% in 2024. Some of that drop was as a result of automakers wound down the sale of imported automobiles with cheaper price tags, akin to the Nissan Versa.
But there are too many prices and an excessive amount of uncertainty for automakers to make widespread adjustments of their manufacturing unit footprints.
“It’s a huge commitment (to build a factory) and to do it on a whim would be borderline crazy,” mentioned Ivan Drury, director of insights at automotive shopping for website Edmunds. “So the safest action is no action. Continue on, even with that increased (tariff) cost.”
And a method that automakers maintain prices down is below menace – the US-Mexico-Canada Agreement, or USMCA, the commerce settlement reached throughout Trump’s first time period.
That deal is now up for renegotiation, and Trump instructed final month he’d stroll away from it if there weren’t substantial adjustments in favor of American firms. That terrifies automakers which have come to rely upon components having the ability to transfer freely throughout US borders with Canada and Mexico.
“We urge a swift and durable resolution that ensures a level playing field and provides long-term certainty needed for capital-intensive automotive investments,” mentioned a assertion from the American Automakers Policy Council, a commerce group representing General Motors, Ford and Stellantis.
Tariffs are taking a chunk into earnings. Toyota paid $8.4 billion in duties in its most up-to-date fiscal year, swinging its North American outcomes from a revenue to loss. General Motors paid $3.1 billion in tariffs in 2025, and Ford paid $1 billion.
Which isn’t to say that the tariffs have been utterly ineffective in incentivizing firms to transfer production again to the US. In addition to the Toyota Tacoma, final year General Motors mentioned it might shift the meeting of two SUVS from Mexico. It can even cease importing a Buick SUV from China and can construct a substitute mannequin in the US.
But these automobiles will go to an present plant in Kansas and one other plant in Tennessee. Those amenities had room after GM reduce on large funding into EV production after Trump and Republicans in Congress ended authorities help for electrical automobiles.
For Toyota, there are additionally enterprise causes past commerce coverage to shift production to San Antonio, mentioned Patrick Anderson, a Michigan economist and knowledgeable in the auto business.
“Toyota has been very successful at growing its truck business in the United States, and their San Antonio production is already the mainstay of that in the United States,” he mentioned. “So it makes natural business sense to consolidate existing operations.”
And even with tariffs as excessive as they are, it doesn’t make sense for automakers to shift production primarily based on commerce insurance policies that may shift a lot quicker than it takes to construct a manufacturing unit.
Experts say it might take the automakers years, and value them billions, to construct sufficient new US vegetation or develop present ones to change imported automobiles, particularly when Trump’s successors can simply as simply reverse his insurance policies. Labor prices in the US are additionally greater than in Mexico and another nations.
Demand can also be sturdy – whole automobiles gross sales rose 2% final year, even with document excessive automotive costs – which motivates automakers to maintain imports flowing.