Updated

Updated · CNN · Jul 12

Toyota Shifts Half of Tacoma Output to Texas as $8.4 Billion Tariff Bill Hits Earnings

Updated

Updated · CNN · Jul 12

Toyota Shifts Half of Tacoma Output to Texas as $8.4 Billion Tariff Bill Hits Earnings

Q: With tariffs adding billions to costs, will shifting production to the U.S. actually lower truck prices for consumers?

Probably not. Moving some Tacoma production to Texas may help Toyota reduce future tariff exposure, but it is unlikely to translate into lower sticker prices for buyers. The main reason is that U.S. production is not automatically cheaper. Building and expanding factories takes years and billions of dollars, and Toyota is investing about $3.6 billion in San Antonio. Labor and operating costs in the U.S. are generally higher than in Mexico, and many parts will still cross borders, leaving automakers exposed to duties and supply-chain costs even if final assembly happens in Texas. Tariffs have already raised industry costs sharply. Toyota paid $8.4 billion in duties in its last fiscal year and expects even more this year, while the broader industry absorbed more than $35 billion in tariff-related costs in 2025. Analysts say those costs have helped push average vehicle prices up by roughly 10%, not down. Shifting production can soften some of that pressure, but it does not erase it. Toyota’s move also appears driven as much by long-term strategy as by tariffs. The company is expanding an existing truck plant in a strong U.S. pickup market, which is cheaper and faster than building a new factory from scratch. That can improve resilience and margins, but companies do not usually pass all savings directly to consumers, especially when demand remains solid. So the likely effect is price stabilization or smaller future increases, rather than cheaper trucks.

3 articles · Updated · CNN · Jul 12

Half of Toyota’s Tacoma pickup production will move to an expanded San Antonio plant, while the company keeps building the model in Mexico.
Toyota said the shift reflects multi-decade strategy and operational consolidation, not a direct response to Trump’s tariffs, despite the president calling it proof that tariffs work.
Tariff pressure is still mounting: Toyota paid $8.4 billion in duties in its latest fiscal year, turning its North American business from profit to loss.
Most automakers have not followed suit because new US plants would take years and billions of dollars, and 46% of vehicles bought in the US last year were still imported.
That caution is reinforced by uncertainty over the USMCA trade pact, which Trump has threatened to reopen or quit, unsettling carmakers that rely on cross-border parts flows.