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Toyota warns US auto tariffs will harm consumers

Production cost of Camry expected to jump $1,800

Toyota Motor sells about 400,000 Camrys in the U.S. each year.

NAGOYA, Japan -- Toyota Motor is speaking out against proposed 25% U.S. tariffs on imported vehicles and automotive components, pointing to higher production costs that would hurt American consumers and workers.

The Japanese automaker will submit to the U.S. government later this week a statement opposing the tariffs, which are being proposed by President Donald Trump on national security grounds.

The Commerce Department has launched a probe to determine whether the levies are warranted and is accepting public comments through Friday.

The Alliance of Automobile Manufacturers, based in Washington, has come out strongly against the tariffs. The trade group estimates they would amount to a $45 billion annual tax on American consumers.

Prior to submitting a formal statement, Toyota's U.S. arm released a comment Wednesday, saying the production cost of a Camry sedan made at a Kentucky plant would go up by $1,800.

"A hundred and thirty-seven thousand Americans support their families working for Toyota, and Toyota and Lexus dealerships," reads the text. "They are not a national security threat. ... We believe the only plausible outcome of this investigation is to reject the notion that automotive imports threaten national security."

Top Toyota executives have shown some understanding toward Trump's policy, saying it is natural for a national leader to adopt measures to protect the domestic industry. 

Still, the U.S. unit has opposed the policy with strong language. The underlying thinking is that increasing production in the U.S. without necessary cost competitiveness would be unsustainable and would not benefit the American people.

Furthermore, Toyota intends to keep producing 3 million vehicles annually in Japan to preserve jobs at home and provide a base for research and development. Last year, the automaker exported 710,000 units to the U.S., the mix including sports utility vehicles and hybrids.

Despite that, Toyota imported only 29% of the vehicles it sold in the U.S. in 2017. That figure is down from 99% in 1980 and 66% in 1990.  

Since Trump took office, Toyota has announced more than $3 billion in investments on U.S. soil. The number surpasses General Motors' $1 billion in planned spending, and approaches Ford Motor's $3.4 billion. Toyota is building a factory in Alabama that is to start turning out cars in 2021.

Separately, Toyota is still bracing for the outcome of negotiations to overhaul the North American Free Trade Agreement. The carmaker has scant production capacity in Mexico, but it produced 570,000 vehicles in Canada last year. Nearly 80% of the output is imported into the U.S. Many of Toyota's SUVs are produced in Canada, and a tariff on those hot-selling vehicles would be a severe hit to the company and its suppliers.

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