Toyota announced it will shift some production of its Tacoma pickups from Mexico to the United States. The company will build half of its best-selling midsize Tacoma pickups at an expanded plant in San Antonio, Texas.

Tariffs and Trade Policy

President Donald Trump heralded the shift to US soil, calling it “a really big deal” and proof of “Tariffs at work!” However, Toyota didn’t cite tariff policy as the catalyst for the move. Instead, the company said its investments are based on broader strategic goals.

Despite the Trump administration’s efforts to incentivize companies to move production to the US through tariffs, few automakers have announced plans to do so. Most would rather pay tariffs than spend billions to build new facilities. Labor costs in the US are also higher than in Mexico and some other countries.

Automakers’ Reluctance

Automakers are reluctant to make widespread changes in their factory footprints due to the high costs and uncertainty involved. Ivan Drury, director of insights at car buying site Edmunds, said, “It’s a huge commitment to build a factory, and to do it on a whim would be borderline crazy.”

The US-Mexico-Canada Agreement (USMCA) is also a factor in automakers’ decisions. The trade agreement is up for renegotiation, and President Trump has suggested he would walk away from it if there aren’t substantial changes in favor of American companies. This uncertainty is causing concern among automakers that rely on parts being able to move freely across US borders with Canada and Mexico.

Original reporting: KRDO (Colorado Springs metro) — read the source article.