Toyota Exec: Tariffs Have 'Nothing to Do With National Security'

July 10, 2018

By Alisha Haridasani

Japanese automaker Toyota disputes the argument that national security concerns were the reason for imposing tariffs on a myriad of goods entering the United States.

"We don't think this is really about national security," said Zack Hicks, CEO and president of the Toyota Connected unit in North America, in an interview with Cheddar on Tuesday.

Hicks warned that the consumer and American workers would eventually bear the brunt of the additional tax.

Toyota, like several foreign auto companies, has been producing many of its vehicles in America for the past three decades, employing more than 170,000 people in the U.S.

The Trump administration implemented tariffs on foreign steel and aluminium in May, which analysts said will hurt manufacturing in America. The president is also engaged in a heated trade war with China, taxing high tech imports to punish Beijing for alleged intellectual property theft.

The countries that have been hit by U.S. tariffs have retaliated, slapping taxes on American-made products, leaving many companies worried about the future of global supply chains and operations.

Toyota's comments came on the same day it launched a car-sharing program in Hawaii that would help the company tap into the growing appetite for a shared economy, which threatens to further upend the auto industry in the U.S.

The new service, Hui, was built in partnership with Servco Pacific, Toyota’s distributor in the island state. Users can choose from a fleet of Toyota and Lexus cars to rent out by the hour or for the day, with prices starting at $9.95 per hour with gas, insurance, taxes and fees, and roadside assistance.

“One of the nice features is, once you find the vehicle that you want, as you walk up to it, you can use your phone to unlock and lock the vehicle,” said Hicks.

In addition to Honolulu, Hicks said Toyota is looking to roll out the service in cities in Spain, Ireland, France, and Norway, with plans to potentially expand across other American cities as well.

“We’re working with a partnership model that allows our dealers and our distributors to be able to either white label it, and in the future we may even consider maybe having a national brand.”

Hui is Toyota’s gateway into the shared mobility market, which is expected to generate revenues of more than $5 billion in 2021 while denting car sales in the long run.

"We are transforming into a global mobility company," said Hicks. "Even if that means some disruption to our business model."

Last year, General Motors launched a similar service called Maven, while start-ups like Zipcar, Fair, and Flexdrive have all started to disrupt car ownership through subscription models.

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