Question

1. Why do you think Toyota is planning on increasing their investment in the US?
2. Should there be a concern about increased cost of production as Japan’s investment increase?
3. What role did tariffs play in Toyota’s decision to build new plants, and refurbish existing plants in the US?
4. Do you think the tax reform and the tax rate decrease of approximately 43 percent on corporations in the US played a role in Toyota’s decision?

Answer 1

Why do you think Toyota is planning on increasing their investment in the US?

Now Toyota is finding profitable to make an investment in the USA. Merely exporting to the USA would not increase profits. Now tariffs barriers have increased substantially.

Should there be a concern about the increased cost of production as Japan’s investment increases?

The cost of production is relatively high in the USA. Thus, when Toyota will increase its production, the factor of production would not be easily available in the economy. So the overall cost of production will rise.

What role did tariffs play in Toyota’s decision to build new plants, and refurbish existing plants in the US?

President Trump has imposed tariff barriers on the cheaper import, Thus, now it is not profitable to make export to USA. Thus Toyota has increased its investment USA to the tune of $ 13 billion.

Do you think the tax reform and the tax rate decrease of approximately 43 percent on corporations in the US played a role in Toyota’s decision?

The tax rate has a strong bearing on the firm decision to set up a manufacturing unit. President Trump has decreased tax, so now firms are finding it profitable to set up manufacturing units in USA. Toyota decision to increase investment in USA has also been influenced by the government decision to decrease the tax rate.