After a year of tariffs, automakers are still resistant to moving production to the US

Key Points:

• Toyota announced it will shift production of half its Tacoma midsize pickups to an expanded plant in San Antonio, Texas, while continuing to build Tacomas in Mexico, marking a rare move of production from Mexico to the US among automakers.
• President Trump praised the shift as evidence of tariffs working, but Toyota stated its investments are long-term strategic decisions not directly driven by tariff policy.
• Most automakers prefer paying tariffs over investing billions to build new US factories, as moving production is costly, complex, and uncertain, with many choosing to utilize existing plants rather than build new ones.
• The renegotiation of the US-Mexico-Canada Agreement (USMCA) creates further uncertainty for automakers reliant on free cross-border parts movement, with industry groups urging a stable resolution to protect investments.
• While tariffs have pressured automakers financially—Toyota, GM, and Ford paid billions in duties recently—only limited production shifts back to the US have occurred, often consolidating operations at existing facilities rather than building new plants.