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Trump’s Car Tariffs Worry Toyota and Japan’s Automakers

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Trump’s Car Tariffs Worry Toyota and Japan’s Automakers

Before the election, Toyota Motor and other Japanese automakers thought a second Trump administration could be good for them.

President Trump had campaigned on dismantling policies aimed at swiftly accelerating the U.S. auto industry’s shift away from fossil fuels and to electric vehicles — directives that Toyota and other leading manufacturers of gasoline and hybrid gasoline-electric cars had also long opposed.

Toyota donated $1 million to Mr. Trump’s inauguration in January, and attendees at the company’s dealership meeting in Dallas that month said it was brimming with Trump cheer.

But as Mr. Trump’s agenda has taken shape, much of that optimism has turned to alarm.

In February, the administration signed an executive order imposing 25 percent tariffs on goods from Mexico and Canada, where Toyota and other Japanese companies assemble many of the cars they sell in the United States.

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The administration has said that on April 2 it will announce “reciprocal tariffs” on countries that run large trade surpluses with the United States — a move widely expected to affect Japan and its cars.

Japan is one of the world’s largest automobile exporters, and the United States is the biggest market for companies like Toyota, Honda, Nissan, Mazda and Subaru. So, as the tariff deadline approaches, Japan is now preparing for a blow that could be devastating not only to the profits of the nation’s automakers but to its overall economy.

With Japan’s economy already stifled by inflation, some economists estimate that if Mr. Trump’s automotive tariffs take effect as threatened, they could wipe out 40 percent of potential economic growth this year.

Mr. Trump has long had a combative relationship with Japanese car companies. In the 1980s, when he floated the possibility of a presidential run, Mr. Trump railed against auto giants from Japan, once telling Oprah Winfrey that they come to the United States and “knock the hell out of” local manufacturers.

Shortly after Mr. Trump was first elected in 2016, Toyota came forward with plans to invest $10 billion in the United States. Japan’s former prime minister Shinzo Abe — who was considered a skilled Trump whisperer — leveraged the president’s love of adulation and secured a promise not to impose additional duties on Japanese cars.

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Japan’s success in fending off tariffs the first time around was part of the reason many leaders in the automotive industry were sanguine — and even hopeful — about another Trump term. The other reason, especially for Toyota, involved electric vehicles, which Mr. Trump had mostly ridiculed before recently declaring himself a fan of Tesla, the company run by his close adviser Elon Musk.

In the early 2020s, when many of its competitors rushed into electric vehicles, Toyota held firm to the hybrid gas-electric cars it had pioneered decades earlier. The company argued that the world was not fully ready for electric vehicles. They were expensive for consumers and the infrastructure needed to charge their batteries remained incomplete.

Automakers were also mostly selling electric vehicles at a loss. The prospect of Mr. Trump’s rolling back initiatives intended to rapidly spur the transition to electric cars was seen as a way for Toyota to buy time, given that it had only one mass-market electric vehicle available in the United States.

Toyota lobbied against stricter Biden-era tailpipe pollution limits and supported politicians in the United States who were against what it viewed as “mandates” to sell more electric vehicles. Much of this lobbying came via Toyota’s network of car dealerships, some of which, after being prompted by Toyota, conveyed their concerns about a swift transition to electric vehicles to elected officials, according to correspondence viewed by The New York Times.

A spokesman for Toyota said providing customers with affordable vehicles and a variety of options was the best way to reduce emissions as soon as possible, which is the company’s goal. “A consumer-driven market will bring more stability and healthy competition to the auto industry,” he said.

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At the January dealership meeting in Texas, leaders of Toyota’s North America business said that they believed the company had held firm during the presidency of Joseph R. Biden Jr., and that they were now hopeful they had more “like-minded politicians” in positions of power, according to two people who attended the event who were not authorized to talk publicly.

The next month, Mr. Trump outlined plans for tariffs that could hit exports of cars from Canada, Mexico and likely Japan.

The Trump administration’s plans for tariffs have shifted often. But the prospect of new taxes on foreign-made cars is already weighing on Japanese auto companies and some of their dealerships in the United States.

In Maine, Adam Lee is the chairman of Lee Auto Malls, one of the state’s largest auto dealership groups. Lee Auto Malls sells brands including Toyota, and last month it had its worst February in terms of net profit since 2009.

As Mr. Trump has unveiled his tariff agenda over the past two months, “faith in the economy has seemed to be the lowest it has been in a long time,” Mr. Lee said. “People don’t buy cars when the world is in chaos,” he added.

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Analysts expect Japan and South Korea, because of their large presence in the United States and tendency to import many of the cars they sell there, to be the automaking countries most exposed to Mr. Trump’s proposed tariffs.

Toyota made about one million of the 2.3 million cars it sold in the United States last year outside the country. Executives at Nissan and Honda have warned that Mr. Trump’s tariff plans would carve deeply into their earnings.

For Japan, whose top export is cars, a 25 percent tariff on automobile exports to the United States could reduce the country’s gross domestic product by around 0.2 percent this year, according to estimates from Japan’s Nomura Research Institute.

Given that Japan’s economy has a potential growth rate of only around 0.5 percent this year, a 0.2 percent hit to G.D.P. would represent a “considerable blow,” according to the research institute.

For now, some Japanese car companies are trying to accelerate shipments to the United States before April 2. They are also beginning preparations to ramp up production to the extent they can at the 24 manufacturing plants they operate inside the United States.

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Over the past seven decades, Toyota has invested more than $50 billion in the United States, and it will continue to deepen those investments, a spokesman for the company said. Including in the United States, where it directly employs more than 49,000 people, Toyota’s philosophy has always been to “build where it sells and buy where it builds,” he said. Toyota is also fully compliant with the United States-Mexico-Canada trade agreement, he added.

Groups representing the automakers in Washington have also been working their contacts on Capitol Hill. They are hoping lawmakers can help make the case for how much Japanese auto manufacturers invest in the United States and how tariffs could hurt American consumers by raising prices.

So far, Japanese officials have failed to gain promises of exemptions from tariffs.

Three people involved in the lobbying efforts, who spoke on the condition of anonymity to discuss private conversations, say they are repeatedly asked: Are there any new investments they can commit to or ones in the pipeline they can repackage as inspired by the new president?

At the moment, the people said, they do not have new large projects to show.

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Most Japanese automakers do not have excess production capacity in the United States, according to Michael Robinet, a vice president at the automotive intelligence provider S&P Global Mobility. That means that if they want to manufacture more vehicles, they would have to build new factories.

But factories would take years to build and demand significant investments from companies currently facing a “highly unstable trade environment,” Mr. Robinet said. “Automakers are not going to make decisions that have lots of zeros behind them unless they know that they have a solid business case,” he said. “And right now they don’t.”

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Commentary: The UC faculty just won a big court victory over Trump. But why didn’t UC join their lawsuit?

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Commentary: The UC faculty just won a big court victory over Trump. But why didn’t UC join their lawsuit?

On Nov. 14 the faculty and staff of the University of California won a significant victory over President Trump in his effort to fine UCLA $1.2 billion for resisting his efforts to bend the university to his ideological demands.

Finding that the plaintiffs submitted “overwhelming evidence” that Trump and his cabinet members pursued a campaign of cutting off government funding with the goal of “bringing universities to their knees and forcing them to change their ideological tune,” federal Judge Rita Lin of San Francisco blocked the fine and nearly $600 million in funding cuts. She ordered the money to start flowing again.

Lin’s ruling resembles those by other federal judges who blocked Trump’s funding cutoffs. Faculty and staff representatives, with the American Assn. of University Professors as the lead plaintiff, justly celebrated the UC injunction, even though it’s likely that the government will appeal.

It may be hard for an educational institution to ride this out until 2029. For an institution that budgets on an annual basis, three years is a long time.

— Dan Schnur, UC Berkeley

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But two entities with an interest in the case’s outcome have been silent: the state of California and UC itself. Neither joined the AAUP lawsuit, which was filed in September, and neither has commented since.

It’s not as though the state and the university are blind to the potential impact of Trump’s funding cutoff. When Trump’s demands and threats were made public in August, Gov. Newsom termed them “extortion” and threatened to sue. UC President James B. Milliken said the announced cuts would be a “death knell for innovative work that saves lives, grows our economy and fortifies our national security.”

Addressing the UC Board of Regents at its meeting Wednesday, Milliken stated that the university system still faces the loss of more than $1 billion in federal research funding, but didn’t mention the AAUP lawsuit.

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UC reportedly has continued negotiations with the White House. A UC spokesperson wouldn’t comment on any such talks, even to confirm them. A spokesman for Gov. Newsom said he’s closely watching the numerous court cases challenging Trump’s funding threats, and “he’s pleased with the recent court rulings affirming that Trump’s assault on California’s world-class research institutions was reckless and illegal.”

Let’s keep in mind what’s at stake in this battle. The University of California is the premier public university system in the nation. It’s the second-largest employer in the state and one of the most important providers of healthcare. The productivity of its research is spectacular. Much of the universities’ work is supported by the government — $17 billion a year, including matching Medicaid and Medicare funding and student aid.

“We were hopeful that the UC system would defend itself legally,” says Veena Dubal, a law professor at UC Irvine and general counsel to the AAUP. After UCLA published the administration’s 27-page list of demands in August, she says, the AAUP decided it couldn’t wait any longer: “We couldn’t not sue, they were so outrageous.”

The demands included bans on diversity programs, public demonstrations across much of the campus and provisions for transgender students. UCLA also would be required to refuse admission to foreign students “likely to engage in anti-Western, anti-American, or antisemitic disruptions,” and to comply with Trump’s ban on “gender ideology” — that is, defining males and females as anything other than the sex they were assigned at birth.

The state and the UC system haven’t entirely avoided legal jousting with Trump. California led seven other states into federal court to challenge the Dept. of Education’s termination of $65 million in grants funding programs that included diversity, equity and inclusion initiatives. They won at the trial level, but the Supreme Court stayed that ruling on grounds that the case may have been brought in the wrong federal court.

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The regents also joined a lawsuit brought by the Assn. of American Universities and 13 other universities challenging the Dept. of Health and Human Services limit on reimbursements for overhead costs on government-funded research, which would cost universities billions of dollars. They won at the trial level, but the government appealed that ruling. The state also sued Trump or participated in lawsuits on other topics.

One can understand, even sympathize with, the reluctance of UC to pursue a courtroom fight over Trump’s demands. UC faces the same quandary as other institutions that have tried to reach accords with the administration.

Trump has almost unlimited tools at his discretion to harass his adversaries for years to come through endless “investigations” of purported statutory violations, among other things. Courtroom battles take time and money, resources that may never be recovered. Plus with a pro-Trump majority on the Supreme Court, ultimate victory is nothing like a certainty.

And while Trump’s term won’t last beyond January 2029, at which point his anti-university campaign might end, that may be cold comfort for institutions facing an immediate financial crisis.

“It may be hard for an educational institution to ride this out until 2029,” says Dan Schnur, a veteran political consultant on the faculty of UC Berkeley’s Institute of Governmental Studies. “For an institution that budgets on an annual basis, three years is a long time, and for a student, it’s three-fourths of an undergraduate experience.”

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That brings us to the case the UC faculty and staff made in court. It’s as clear and concise a description of the noxious campaign Trump has conducted against American higher education that one will find anywhere. It was accepted almost in its entirety by Judge Lin.

The administration consistently has portrayed the funding cutoffs as a response to what it claims to be pervasive antisemitism at UCLA and other targeted campuses. Yet as federal Judge Allison D. Burroughs of Boston found in September when she blocked Trump’s grant terminations against Harvard, it’s “difficult to conclude anything other than that [the government] used antisemitism as a smokescreen for a targeted, ideologically-motivated assault on this country’s premier universities.”

Indeed, the UC plaintiffs show that the funding cutoffs were motivated purely by ideology, and flagrantly infringed on free speech rights. Just a week after Trump’s inauguration, the White House issued an order suspending all financial disbursements that involved “DEI, woke gender ideology, and the green new deal.” (“DEI” refers to programs aimed at diversity, equity and inclusion, a favored target of the right.)

The faculty lawsuit quotes Leo Terrell, an assistant attorney general for civil rights and a named defendant, telling Fox News, “The academic system in this country has been hijacked by the left, has been hijacked by the Marxists.” He said, “We’re gonna bankrupt these universities. We’re gonna take away every single dollar.” In an interview he said he had “targeted 10 schools. Columbia, Harvard, Michigan, UCLA, USC… We’re going to take away [their] funding.”

The lawsuit positions the administration’s campaign against UCLA against its similar attacks on funding at Columbia, Brown and Harvard. It also points to the folly of trying to settle with Trump out of court.

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Columbia was among the first universities to settle with Trump — it would ultimately agree to $221 million in payments and to give the government extraordinary oversight of its hiring, pedagogical and social policies. Initially that was a response in March to a government threat to block some $400 million in federal grants.

But even after its initial capitulation in March Trump continued to block $1.2 billion in funding until Columbia agreed to additional demands in July.

As Judge Lin described the government campaign against UCLA and other universities launched by the White House, it starts when “one or more … agencies open civil rights investigations into a university…. Before the investigations are concluded, Funding Agencies cancel large amounts of federal funding.” Then the Justice Department offers to settle with the targets “in exchange for further burdening faculty, staff, and student speech.”

It’s theoretically possible that the Trump administration could make its funding cutoffs stick if it follows the procedures enshrined in law for terminating federal grants (and it may yet prevail in appeals to the Supreme Court).

The rules require government agencies to issue a notice of possible violation and attempt to negotiate a settlement and hold a hearing, then file a report with the House and Senate specifying “the circumstances and grounds for such action” and wait at least 30 days more before canceling any funding. The cancellations can apply only to the specific program deemed to be violating the law.

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The goal of these safeguards, Lin observed, is to protect grant recipients from “‘vindictive’ or ‘punitive’” actions by the government. In these cases, the government followed none of the mandated procedures.

The administration‘s defense, in part, is that the funding cutoffs are entirely within its discretion and can’t be reviewed by a judge, assertions Lin specifically rejected. The administration also stated that the August demand letter to UCLA was merely an “opening settlement offer” in ongoing “confidential settlement negotiations” with the university.

Given the findings from federal judges that Trump has flouted the legal safeguards against abrupt and arbitrary grant cancellations in favor of illicit bullying, the question facing universities trying to negotiate their way out is: What is there to negotiate? The record so far indicates that no settlement will fully satisfy Trump or his anti-woke warriors; only judges can bring the campaign to a halt.

It’s certainly true that in the short run, Trump’s targets will suffer great pain. He knows well that they’re vulnerable to blunt force. “With every day that passes,” Lin observed, “UCLA continues to be denied the chance to win new grants, ratcheting up [the government’s] pressure campaign.”

In the long run, however, there are limits to how much an educational institution can concede.

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One is tempted to recall what Michael Corleone said in “The Godfather Part II” when he was being bullied by the corrupt Sen. Pat Geary into paying a bribe: “My offer is this,” he said. “Nothing.”

It may not be so easy for even powerful universities to take such an uncompromising stand. But it may be necessary.

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Skechers investors say they were forced to take a bad deal when the company went private

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Skechers investors say they were forced to take a bad deal when the company went private

Skechers investors are suing company executives and Skechers owner 3G Capital over what they say was an unfair sale price in an acquisition earlier this year.

3G Capital took the Manhattan Beach-based sneaker company private in a $9.4-billion deal that closed in September and reflected a share price of $63 per share.

In a class action complaint filed this month in Delaware Chancery Court, hedge funds and other large Skechers investors accused the company and 3G Capital of arranging a non-independent deal that shortchanged minority shareholders.

The deal undervalued the company as its shares were taking a beating because of a volatile federal tariff policy, the complaint said. The deal also benefited Skechers President Michael Greenberg and other controlling shareholders, according to the plaintiffs.

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Plaintiffs seeking a higher share price were unable to reach an early settlement with Skechers after the company made an offer that was slightly higher than the original price, Bloomberg reported this week.

According to court documents, 3G Capital had offered a price of $73 per share in March this year, but lowered its offer after Trump’s tariff “liberation day” on April 2.

Investors are now pressing ahead with the case, according to Bloomberg.

Skechers said it would not comment on pending legal matters.

Skechers was one of many footwear and apparel companies that sounded the alarm when Trump passed steep import taxes on countries including China and Vietnam, where many Skechers products are made.

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The company’s stock price fell 23% in early April after the tariffs were announced. Shares bounced back up 30% after the 3G Capital deal was announced.

Around the time of the acquisition, 3G Capital and Skechers said the purchase price represented a 30% premium to the company’s 15-day volume-weighted average stock price.

After the deal closed, about 60 investment pools managed by various firms filed to challenge the price of $1.3 billion worth of shares.

Plaintiffs in the case say Chief Executive Robert Greenberg, along with his son Michael, the company’s president, worked closely with 3G Capital to tailor an acquisition deal that worked for them amid tariff chaos.

“The merger was carefully structured to allow the Greenberg stockholders to monetize a substantial amount of their personal Skechers’ holdings,” the court complaint said.

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Video: What the Jobs Report Tells Us About the Economy

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Video: What the Jobs Report Tells Us About the Economy

new video loaded: What the Jobs Report Tells Us About the Economy

What does the September jobs report, delayed by six weeks because of the government shutdown, say about the economy? Lydia DePillis, our economics reporter, describes how the report, which was better than expected, comes at a moment of deep uncertainty.

By Lydia DePillis, Claire Hogan, Stephanie Swart, Gabriel Blanco and Jacqueline Gu

November 21, 2025

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