Toyota Motor Corp. has warned its U.S. dealers of a potential $1 billion increase in supplier costs if the Trump administration proceeds with its planned tariffs on Mexican imports, Reuters reported June 4, citing a memo to dealers.
The Japanese carmaker's warning comes as the White House announced May 30 its proposal to impose a 5% tariff on all Mexican imports starting June 10, with plans to increase the rate to up to 25% by October if Mexico fails to address measures to "dramatically reduce or eliminate the number of illegal aliens" crossing the border.
An analysis by Panjiva, a business line of S&P Global Market Intelligence, earlier estimated that the tariffs could cost U.S. companies $17.3 billion annually, with the automotive sector expected to witness the hardest impact.
In a June 3 letter to dealers seen by Reuters, Toyota reportedly estimated the cost to be between $215 million and $1.07 billion.
Toyota's midsize Tacoma pickup trucks could suffer from the decision as 65% of the vehicles that Toyota plans to sell in the U.S. in 2019 will be imported from its plant in Baja, Mexico.