Toyota vs. Trump in tax war – Who is going to win?

January 31, 2017 – I reported few weeks back about Trump’s plan to impose a border/import tax, or tariff. Trump has been talking about imposing this tax before he took the oath to become the sitting President. Trump is targeting the automakers excessively. Due to his threats, some automobile companies already have announced the cancellation of their plans to build new manufacturing plants in Mexico; they are now going to invest money in US and make cars here instead of Mexico. But Toyota and some other companies have decided to fight fire with fire. Toyota today sent a message to its dealers in USA and asked them to start making efforts to stop the Trump’s proposed import tax bill from passing. What we are witnessing is a tax war between Trump and automakers.

Toyota has more than 1,400 dealers in USA and [obviously] some supporters of Trump might be running these dealerships. So I don’t expect every dealership to heed Toyota’s call. Nevertheless, some early reports suggest that many dealership owners have started contacting different Republican members of House of Representatives. They are asking these Republican members to reconsider the notion of imposing the proposed tax on imports.

Trump wants to impose twenty percent import tax. If he succeeds in making this proposal a law, then it will have a huge impact on prices of thousands of items in USA. Carmakers like Toyota, who are manufacturing vehicles in Mexico, will have no choice but to pass-on this burden to their customers. In the end, car buyers, or consumers, in USA are the ones who are going to suffer the most. If a car currently has a 3000 Dollar price tag, then its price will jump to $3600 if Trump and the Republicans pass this import tax bill. Ultimately, customers [who are also the voters] in United States of America will have to spend more money to buy the same thing that costs much less now.

Trump is saying that his goal is to bring more business and jobs to United States, but is he going about it the right way? If Trump succeeds in his plans and imposes the said 20% import tax, then prices of Toyota cars will reflect this change. Once car prices increase, the demand is going to decrease. Toyota’s sales and revenue will fall as well. When this happens, what do you think Toyota and other companies will do? Obviously, they are going to lay-off employees to cut cost. This means the jobs market will suffer too…

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