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Toyota Uses Network of Dealers to Fight the Republican Border Tax Push in U.S.

Toyota Uses Network of Dealers to Fight the Republican Border Tax Push in U.S.
Toyota Motor Corp sent an urgent message to its U.S. dealers - tell the politicians the tax would seriously hurt car buyers, days before a group of Republican lawmakers were due to discuss their party's controversial proposal to tax all imports.
According to people familiar with the effort, urging the members of the House of Representatives' tax-writing Ways and Means Committee to rethink their proposal, some of Toyota's 1,500 dealers heeded the call and contacted them.
They warned that consumers would be forced to pay potentially thousands of dollars more for vehicles by imposing a 20 percent tax on imports.
The growing alarm among some of the world’s largest companies that sell imported goods in the United States is underscored by the Japanese automaker's mobilization of its army of dealers. They fear a big tax on imports would put them at a disadvantage to rivals more reliant on U.S.-made products and hurt their sales and profits.
"Cost is going to go up, as a result demand is going to go down. As a result, we're not going to able to employ as many as people as we do today. That's my biggest fear," Toyota's North America CEO Jim Lentz said in an interview.
More than 97,000 people in the United States are employed by Toyota dealers.
While the threat of an import tax has mobilized an unusually broad swath of firms at home and abroad, companies and industry groups frequently lobby Congress. President Donald Trump has attacked companies for manufacturing abroad for U.S. consumers and hence to avoid potential conflict with him, that lobbying effort is taking place largely out of the public eye.
If Toyota builds its Corolla cars for the U.S. market at a plant in Mexico, the company was threatened with the imposition of a hefty fee by Trump earlier this month.
Although what exactly Trump is planning to do is still not clear, a border tax is one option under review to pay for a wall with Mexico, the White House said last week. A border tax has been pledged to be imposed on Mexican imports by him.
Exclusion of export revenue from taxable income, imposition of the 20 percent tax on imports and cutting corporate income tax to 20 percent from 35 percent are included in the plan proposed by House Republicans.
A border tax will outweigh the benefit of a lower headline corporate tax, say companies that rely heavily on imports.
Toyota and other automakers are lobbying lawmakers in states where they have large manufacturing plants and employ thousands of workers as car dealers are reaching out to members of Congress in their districts.
Toyota imports about 1.2 million vehicles to the U.S. market annually, half of its 2.4 million U.S. sales and is the No. 3 vehicle seller in the United States behind General Motors Co and Ford Motor Co. More than 40,000 people are directly emplpyed by it.

Christopher J. Mitchell

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