Trade

Why should I care?

Two big reasons: tariffs and USMCA. TEMA is currently being assessed $1 billion per month in new tariffs since President Trump took office in January, most of which are duties paid on imports from Canada, Mexico and Japan. This is unsustainable.

Anchored by the U.S.-Mexico-Canada Agreement (USMCA), which provided duty-free access for parts and CBUs across North America, Toyota’s supply chains depend on strong, durable, and lasting trade policy that puts all automakers in the U.S. on a level playing field. As such, the tariffs (i.e. duties imposed on imports) or other trade-related policy developments have a significant impact on Toyota’s business operations (as well as that of our suppliers).

What should I know?

The current Trump Administration has made clear its intent to prioritize and incentivize the production of goods—particularly automobiles and parts—in the United States. In order to achieve this goal, President Trump has initiated a number of tariff proposals, some of which are place now and some of which are soon to be in force:

Automobiles: In April and May, respectively, the Trump Administration slapped a 25% tariff on finished automobiles and automobiles parts. While OEMs can deduct the US content portion of USMCA-qualifying vehicles from tariff exposure, note that Toyota and other OEMs are currently paying tariffs on the non-US content of USMCA-qualifying vehicles imported from Canada and Mexico. Furthermore, Toyota is paying the full 25% tariff on imported CBUs auto parts from Japan.
USMCA: Per the aforementioned trade action, the path forward for USMCA remains unclear. On July 1, 2026, the three governments meet to finalize a “review” of USMCA. It is expected that negotiations on potential revisions to USMCA will commence in the fall of 2025 and intensify next year. All three governments must affirmatively approve of extending the provisions of USMCA until 2042; if one party does not agree to extend, then the agreement is still technically in force through 2036 and subsequently requires all parties to meet annually to discuss renewal. However, Trump has shown his willingness to operate outside of trade agreements and it would not be unexpected for him to do so here; however, there’s been little focus on the North American agreement thus far, as the administration has been focused on its negotiations with 90+ other governments around the world.
Reciprocal tariffs: President Trump’s reciprocal tariffs on imports from all countries, with country-specific rates, were originally set to go into place on April 9. However, he put in place a 90-day pause on the country-specific rates, with every country instead facing a uniform 10% across-the-board tariff during the pause (these do not stack with auto tariffs, though). Trump again extended the reciprocal tariff initiation date to August 1, allowing three more weeks of negotiation. We are closely monitoring these discussions, especially between the U.S. and Japan.
Steel and aluminum: In March, President Trump applied a 25% tariff to steel and aluminum imports, including their derivative products (i.e. imported goods that have steel or aluminum parts or componentry). In June, these tariffs were increased to 50%. These do not stack with any of the auto tariffs or the reciprocal rates, but Toyota is impacted by the cost of these tariffs on goods we import that are not impacted by the tariffs on CBUs or parts.
Prospective tariff action: President Trump has directed his administration to study the impacts of and provide policy prescriptions for imports of copper, semiconductors, heavy trucks, and critical minerals, as well as the use of foreign-built shipping vessels. We are deeply engaged with industry associations in providing input to the administration to protect key Toyota interests prior to executive action implementation.

What Should I Say?

The automobile industry is integrated throughout the United States, Mexico and Canada, and every Toyota sold in America fully complies with USMCA. Its operations and global supply chain are complex, and to know the full impact of any tariff action takes time. We are hopeful that resolution in the matter of tariffs will occur imminently and sufficiently so that Toyota can continue providing Americans with affordable, innovative mobility options for every family. Toyota is proud to offer our customers seven different models that start under $30,000 – but affordability across the industry is threatened by the unsustainable costs associated with high tariffs and the uncertain future of U.S. trade agreements.