NAGOYA, Japan -- U.S. President Donald Trump turned up the pressure again on Toyota Motor to build new American plants, a request that may prove difficult to fulfill without sacrificing its domestic production goal.
In his speech to auto industry workers and executives in Michigan on Wednesday local time, Trump promised a review of fuel-efficiency regulations disliked by automakers while calling again for these companies to create U.S. jobs.
"We will reduce burdens on our companies and on our businesses," the president said. "But in exchange, companies must hire and grow in America."
Before the address, Trump met with top industry officials including Jim Lentz, CEO of Toyota Motor North America. As Lentz discussed topics such as a planned $1 billion investment in artificial intelligence development, Trump cut him off and insisted repeatedly that "you have to build plants here."
Trump's row with Toyota dates to early this year, when he castigated the automaker on Twitter for plans to build a factory in Mexico. Shortly thereafter, at the North American International Auto Show in Detroit, President Akio Toyoda highlighted Toyota's contributions to the American economy and mentioned plans to invest an additional $10 billion in the U.S. over the next five years.
Trump stopped talking about Toyota after this, which came as a relief to company executives. But the president's comments Wednesday made it clear that new plants remain a point on which he will not budge. Toyota Senior Managing Officer Tokuo Fukuichi avoided any direct discussion of possible U.S. expansion at a news conference Thursday, saying only that the company will build cars in the best locations it can.
Boosting production in the U.S. would mean lowering domestic output, a difficult pill to swallow given Toyota's policy of making 3 million vehicles a year in Japan. But "considering the auto-related trade imbalance between the U.S. and Japan, a production shift of some size will be unavoidable," said Takaki Nakanishi of the Nakanishi Research Institute.
A Toyota insider expects the automaker to bolster U.S. production of hybrids, the bulk of which are now made in Japan. Hybrids are attracting less attention than other environmentally friendly options such as electric vehicles, and support received from the U.S. government is shrinking. But "it would be significant if we could win incentives in exchange for local production," the source said.
Going toe-to-toe with Trump, a specialist in the art of the deal, will test Toyota's negotiating skills.