Nissan weighing production shift to mitigate tariffs

Building more vehicles in Japan and fewer in Mexico is just one strategy being considered by Nissan Motor Corp. to mitigate higher duties on products entering the U.S., president and CEO Makoto Uchida said on an earnings call with analysts on Feb. 13. However, Uchida’s comments preceded remarks made by President Donald Trump on Feb. 14 who indicated a new tariff on automotive imports was coming in early April. Trump said during a press conference on Tuesday that tariffs on automotive imports as well as on semiconductors and pharmaceuticals would be around 25%.

Prior to Trump’s latest threat on automotive imports, global automakers including Nissan have been considering strategies to mitigate the previously announced tariffs. This includes a 25% duty on products entering the U.S. from Mexico and Canada, which has been delayed until March.

Uchida said Nissan could move some vehicle production out of Mexico and back to Japan to lessen the impact of the blanket 25% tariff on imports from Mexico, but even that would provide little relief and would represent a “huge impact to profit.”

Now that a merger with Honda Motor Co. will not happen, Nissan has refocused on cost reduction strategies to improve profitability, including global workforce and production reductions...Although shifting some production from Mexico back to Japan may offer financial relief from previously announced duties, Uchida saw that move as a “backup plan” but noted the company was also weighing other options, but did not discuss specifics. “We’re thinking of an optimized plan in order to back up to the possible implementation of high tariffs against Mexico,” Uchida said