Toyota tries to strike delicate balance in U.S.-China trade war

Credit: Reuters Studio
Published on May 21, 2019 - Duration: 02:32s

Toyota tries to strike delicate balance in U.S.-China trade war

Toyota last month announced two deals in China that were small in size but large in strategic planning, as internal documents seen by Reuters show the automaker made careful strategic moves to keep the U.S. on side in the midst of trade tensions.

Ed Giles reports.

Toyota tries to strike delicate balance in U.S.-China trade war

One of the world's biggest car makers has found itself in a tricky balancing act to grow its stake in one of the world's most important auto markets.

And it's all because of the US-China trade war.

Japan's Toyota recently announced a handful of deals to transfer its tech in China.

But months before, Toyota's strategists made the call they first needed to offer up big investments in the U.S. to keep President Trump happy.

That's according to internal Toyota documents seen by Reuters Nori Shirouzu, who has more from Beijing.

(Soundbite) (English) REUTERS SENIOR AUTO CORRESPONDENT, NORI SHIROUZU, SAYING: "Right now Toyota's trying to expand its China business significantly, building more factories, opening more stores, but they have to do so very carefully, mainly because the US under Trump is looking for the same thing.

More jobs, more investment, more influence, so they have to do this very carefully, balancing the two countries.

Last month Toyota made two key announcements in China, one was to transfer technology to Beijing auto that was to transfer fuel cell technology, the other one was to set up a joint tech center with Tsinghua University in Beijing.

But before announcing these deals they actually went to the US and made an announcement for additional capacity investment.

And that was to make sure that there's no negative reaction from Washington to the tech deals in China." The Toyota documents show that earlier this year CEO Akio Toyoda called a fresh investment of nearly 750 million dollars in its U-S plants quote "essential" before any China deals were made public.

And it's not just about finding a way to avoid Donald Trump's wrath.

The Trump administration has also threatened to impose tariffs of up to 25 percent on some imported cars and parts.

Trump claimed just last week some foreign cars pose a threat to U.S. national security.

Toyota shot back saying the threat showed its investments "are not welcomed".

All the trade uncertainty isn't just a problem for Toyota.

With 17 million cars sold annually in the U.S. and 28 million sold in China, many of the world's top carmakers are walking the trade war tightrope to carve out their share of the world's two biggest economies.

Toyota declined to comment on the documents that revealed its internal meetings.

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