By KBC Associate 
President Donald Trump made tariffs the focal point of his administration’s economic policy during the first year of his second non-consecutive term in office.
Although the duties have been unpredictable and unpopular with much of the business community, they have not been issued entirely unilaterally.
Ford CEO Jim Farley recently praised the administration for listening to him and other industry leaders while crafting its tariff policies. Multiple changes have been made to the 25% vehicle tariffs announced earlier this year.
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Weeks ago, the administration softened the tariff impact through an executive order that provides auto companies with credits for up to 15% of the value of vehicles assembled domestically.
However, on May 2, days after that executive order was signed, the 25% import tax on engines, transmissions, and other car parts went into effect.
The tariff war has forced domestic and foreign automakers to reevaluate their supply chains and processes.
Foreign automakers with strong sales and production presence in the States have an especially rough road to navigate.
Japan exports about $41 billion of cars to the U.S. annually, so a 25% tariff is a big deal.
Japanese automaker Toyota just made a decision that could save it from import taxes over the long run.
Image source: MercurySable99, CC BY-SA 4.0, via Wikimedia Commons
Toyota moves production of Corolla GR to the UK
Toyota (TM) has 14 factories located in the United States that employ over 32,000 people.
Toyota sold over 2.3 million vehicles in the U.S. last year, a 3.7% year-over-year increase. Between April 2024 and March 2025, the company built 1.96 million units in the U.S., according to Statista.
So despite a U.S. production capacity that can handle nearly 2 million vehicles a year, Toyota still ships in nearly half a million vehicles from overseas to sell in the U.S.
The Corolla GR is one of them.
The high-performance car is currently built in Japan and exported to the North American market, where it is growing in popularity. In fact, Toyota hasn’t been able to keep up with demand.
Related: UK trade deal gives car buyers a glimpse of what the future holds
To meet demand, Toyota will set up a production line at its Burnaston plant in Derbyshire, England to produce 10,000 annually to be exported to the U.S.
Britain just so happens to be the first major trading partner to come to terms with the U.S. on a trade deal.
In early May, the U.S. reached a deal with the UK that would lower the tariffs on most of the staples the company exports to America.
Cars accounted for about 5% of the UK’s total exports to the U.S. in 2024, making automotive the largest UK export to the States.
In 2024, the UK exported £9.0 billion ($12 billion) worth of cars to the U.S., accounting for 24.7% of the country’s total car exports. The U.S. is Britain’s top trade partner in the car sector, with the country shipping 102,000 vehicles to U.S. shores last year, according to AutoShippers.
Despite the clear advantage of shipping the vehicles from Britain thanks to the new tariff situation, Toyota insists it isn’t moving production of the Corolla GR to Britain for this reason, according to Reuters. The move is said to have nothing to do with tariffs.
Toyota spends big to bring production to UK
Toyota plans to spend big in order to make the UK plant ready.
The company plans to invest 8 billion yen ($56 million) to prepare the plant for showtime.
The Burnaston facility reportedly has experienced a decline in production since Brexit, and because it already produces the base model of the GR, the Corolla hatchback, it was a natural choice for this project, Reuters sources said.
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Also, Toyota plants in the U.S. are running at full capacity, making it difficult to move production Stateside.
Toyota will bring Japanese engineers over to the UK to share expertise with the workers there. The plan is to reach the 10,000 vehicle annual run rate by the middle of 2026.
Toyota currently makes the GR at the Motomachi plant in Toyota City. Production at the plant is already at full capacity.
The line produced 25,000 cars last year, 8,000 of which were GR Corollas.
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