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Lentz: Very bullish, but worried about "some crazy" trade policy implications.

DETROIT – The trade and pay environment under US President Donald Trump poses the greatest potential threat to the automotive industry, says Jim Lentz, CEO of Toyota North America.

While Toyota remains "very, very bullish" in the overall market, Lentz said "some crazy" potential Effects of trade and Trump's study of the impact of car imports on national security "could be devastating to the industry."

The Trump tariffs on aluminum and steel under section 232 of the 1962 Trade Expansion Act would have increased the cost of the Japanese carmaker by 40 per cent. That's even though more than 90 percent of the steel comes from the US.

"Everyone sees cost increases per unit of $ 100 to $ 400, just for steel alone," he said.

"New" NAFTA deal

The industry was "breathe" and Trump signed a "new" NAFTA deal. known as the US-Mexico-Canada-Agreementbut there are still challenges to getting through the congress.

If the deal is delayed, Lentz believes Trump could use section 232 or other means as "leverage" instruments that could hurt the industry.

"I'm sure there'll be fireworks before it's over," he said.

Lentz described the agreement between the US, Mexico and Canada as "the most aggressive" agreement on the countries of origin. The agreement stipulates that 75 percent of vehicles must be manufactured in the US, Mexico or Canada in order to qualify for zero tariffs.

He believes that Toyota can meet the new standards.

After his remarks, Lentz told reporters that the Trump government "knows" and "understands" Toyota's trade and tariff positions.

Healthy outlook

In addition to the potential trade and tariff bumps, Lentz expects the Japanese automaker to expect an average of 16.6 million US light vehicle sales by 2025, including a potential decline from 300,000 to 400,000 units in 2019.

"I think the industry is strong," he said, adding that the forecast included a weakening of the economy as a whole. "So we are still very optimistic in the overall market."

This optimism includes cars. Toyota expects to benefit significantly from the Detroit automakers cut or give up traditional cars.

However, that does not mean that the company does not cut name tags.

"If you have vehicles in your lineup that have no strategic value, they offer no value and you do not make any money, and you'll probably need to get out of this business," he said. "It was not necessary in the past."

Lentz used Scion, his former "youth brand" killed in 2016as an example of how Toyota ends a product once it has taken its course.

This also means that the company may invest additional resources in emerging technologies such as autonomous vehicles.

Traders will play an important role in Toyota's future mobility efforts, according to Lentz. Everything the Japanese automaker is considering will include its dealers.

He said, "Everything we do will improve the strength of our dealers."

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