Toyota is consolidating production of its Lexus models in the United States, with reports suggesting the decision may be linked to tariffs imposed by the Trump administration. But the claim is slightly confusing, as one would normally expect a foreign automaker to increase U.S. assembly to avoid those fees. The president also recently signed an executive order to lower tariff rates on Japanese cars from over 27 percent to 15 percent. But the real reason for the move becomes clear after a modicum of investigation.
The factories in question are Toyota Motor Manufacturing Kentucky (TMMK) and Toyota Motor Manufacturing Indiana (TMMI). In addition to the Lexus TX, TMMI is responsible for assembly of the Toyota Highlander, Grand Highlander, and Sienna minivan. In addition to the Lexus ES, TMMK builds the Toyota Camry, RAV4, and likewise manufactures some of the automaker’s engines.
And it’s the Lexus ES that America appears to be losing at the end of this year.
With a large portion of Toyota’s North American already focused on building hybrid vehicles, Nikkei Asia reported that the decision to consolidate those facilities was “aimed at reinforcing U.S. production, which face intense price competition, while shifting some production of high-end Lexus cars, which sell well, to Japan.” Nikkei and several other outlets also made reference to avoiding U.S. tariffs potentially being a factor (e.g. Jalopnik).
However, the automaker likely already had plans to pull the 2026 Lexus ES (which is hybrid only) production from our market so the updated model could be built in Japan. As previously noted, the White House recently made the decision to reduce automotive tariffs being imposed on Japanese-made vehicles. But the automaker would have almost assuredly made its call on the Lexus ES while the industry was still under the presumption that rates would be significantly higher.
Claims that this is somehow about the brand dodging tariffs from the United States don’t make much sense. The rational argument would be that Toyota opted to bring ES production back to Japan after Trump softened tariffs — and even that would mean Toyota made a snap decision within the last week. The company also could have moved production to Toyota Motor Manufacturing Canada (TMMC) so the luxury sedan could be theoretically be built alongside the RX and NX.
But that wouldn’t make sense to anyone who knows anything about automotive manufacturing. This seems to be exclusively about Toyota not wanting to have to retool its North American facilities, potentially resulting in downtime, for the revamped ES. While its sales have been fairly robust for a modern sedan, crossovers and SUVs remain significantly more popular. But the true reason is only known to Toyota leadership, which hasn’t weighed in on the topic.
It’s absolutely essential to note, however, that the 2026 Lexus ES won’t be based on the Toyota Camry anymore. It’s going to be based off the Toyota Crown (pictured above) — which is built in Japan.
As a car person, I’d rather have my Japanese vehicles built inside Japan (ideally sans import tariffs). But politics and the global nature of the industry has started to complicate the matter. In many instances, foreign-branded vehicles actually have more components and labor stemming from North America than their allegedly American alternatives. Other times, you’ll find the opposite to be true and the VIN matches the assumed country of origin.
As for all the noise about who exactly drove Lexus ES production out of the United States, you can probably ignore literally everything you’ve heard. The tariffs were almost assuredly not a factor, even if they might eventually be used to rationalize prospective price increases on the model. This is likely just a matter of Toyota just wanting to put the sedan on the same assembly line as the model it shares the most components with. With Lexus now basing the ES off the Toyota Crown, it makes good sense to build them together. For all the politicking and speculation surrounding the issue, it’s as simple as that.
[Images: Toyota]
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