Japanese auto manufacturers are considering their options in the light of US threatened trade deal changes, which include investing in US plants or gaining access to existing operations through a merger. Timothy Conley reports.

US president Donald Trump’s criticism of the North American Free Trade Agreement (NAFTA) has created widespread uncertainty among Japanese automakers seeking to open manufacturing plants in North America.

Since assuming the presidency, Mr Trump has vowed to renegotiate multilateral trade deals such as NAFTA in favour of bilateral agreements, where the US can exert greater leverage over its partners.

The president’s calls to renegotiate NAFTA, including his proposed 20% border tax on Mexican imports, have prompted several Japanese automakers to change production strategies. Most notably, Toyota announced a $600bn investment at an assembly plant in Indiana, which will result in the creation of 400 US jobs. Other Japanese automakers, like Mazda, are considering merging their operations with Toyota as a means of acquiring access to existing US manufacturing plants.

“Imposing a tariff would reduce the benefits for [Japanese automakers], as well as all the US companies that have located production facilities in Mexico,” said Stephen Woolcock, a trade specialist at the London School of Economics.

With an upcoming state visit to the US in February by Japanese prime minister Shinzo Abe, Japan’s policymakers are considering all options in response to a renegotiated NAFTA, including the establishment of a bilateral free trade agreement. 

This article is sourced from fDi Magazine
fDi Magazine

Global greenfield investment trends

Crossborder investment monitor

fDi Markets is the only online database tracking crossborder greenfield investment covering all sectors and countries worldwide. It provides real-time monitoring of investment projects, capital investment and job creation with powerful tools to track and profile companies investing overseas.

Click here to find out more about fDi Markets

Corporate location benchmarking tool

fDi Benchmark is the only online tool to benchmark the competitiveness of countries and cities in over 50 sectors. Its comprehensive location data series covers the main cost and quality competitiveness indicators for over 300 locations around the world.

Click here to find out more about fDi Benchmark

Research report

fDi Intelligence provides customised reports and data research which deliver vital business intelligence to corporations, investment promotion agencies, economic development organisations, consulting firms and research institutions.

Find out more.