Tariffs Cause Toyota To Shuffle The Deck In North America
Toyota is making big changes to its North American manufacturing footprint as U.S. tariffs reshape the economics of building cars.
Key Points
- Toyota will end U.S. production of the ES sedan in Kentucky, consolidating all American Lexus output to its Indiana plant.
- Higher U.S. import tariffs under the Trump administration are forcing Japanese automakers, including Toyota, to restructure supply chains and adjust pricing strategies.
- With U.S. demand for hybrids outpacing EVs, Toyota will expand Camry and RAV4 hybrid production in Kentucky to meet growing consumer demand.
According to a report from Nikkei, the automaker will consolidate Lexus production in the United States into a single facility. Currently, Toyota builds the Lexus ES sedan in Kentucky and the Lexus TX SUV in Indiana.
Well, that arrangement is coming to an end once the current ES orders are fulfilled— the next-generation model due next year will be imported exclusively from Japan. Indiana will become Toyota’s only U.S. plant producing Lexus vehicles, with Canada continuing to handle two other Lexus models.
The play opens up capacity in Kentucky to increase production output of high-demand hybrid Camrys and RAV4s, which are popular with shoppers who are cool to pure play electric vehicles. Additionally, Reuters is reporting the automaker will begin producing two all-electric SUVs at the massive Kentucky facility—the automaker's largest factory outside of Japan.
The new EVs will reportedly be battery-powered SUVs inspired by two of Toyota’s most recognizable nameplates: the RAV4 and the Land Cruiser. Toyota declined to officially comment on the plans. The deck shuffle is a clear response to President Donald Trump’s tariffs, even if Toyota won't admit it.
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An experienced automotive storyteller and accomplished photographer known for engaging and insightful content. Michael also brings a wealth of technical knowledge—he was part of the Ford GT program at Multimatic, oversaw a fleet of Audi TCR race cars, ziptied Lamborghini Super Trofeo cars back together, been over the wall during the Rolex 24, and worked in the intense world of IndyCar.
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