Toyota recently announced it would shift some production from Mexico to the United States, but this move is the exception rather than the rule. Most automakers have been reluctant to move production to the US, despite the Trump administration’s tariffs aimed at encouraging them to do so.

Tariffs’ Limited Impact

The tariffs, which were imposed over a year ago, have not had the desired effect of spurring a significant shift in production to the US. While some automakers, like General Motors, have announced plans to move production of certain vehicles from Mexico to the US, these moves are relatively rare.

According to experts, the main reason for this is that building new factories in the US is a costly and time-consuming process. Labor costs in the US are also higher than in countries like Mexico, making it more economical for automakers to continue producing vehicles abroad and paying the tariffs.

Furthermore, the uncertainty surrounding trade policies has made it difficult for automakers to make long-term investment decisions. The US-Mexico-Canada Agreement (USMCA), which was negotiated during the Trump administration, is currently up for renegotiation, and the outcome is uncertain.

Business Considerations

Toyota’s decision to shift some production to the US was motivated by business considerations, rather than just the tariffs. The company has been successful in growing its truck business in the US and saw an opportunity to consolidate its operations in San Antonio, where it already produces other vehicles.

Other automakers may follow a similar approach, but for now, the majority are choosing to pay the tariffs rather than invest in new US factories. As a result, the US continues to rely heavily on imported vehicles, with 46% of cars purchased by US consumers last year being imported.

Original reporting: El Paso News (HLL/CB) — read the source article.