Toyota Eyes US Assembly Of RAV4 In Kentucky As A Shield Against Trump's Tariffs

Toyota Motor Corp TM is considering producing the next version of its popular RAV4 SUV in Kentucky, U.S., to bypass President Donald Trump’s 25% tariffs on imported cars.

If the Japanese automaker opts for the Kentucky plan, it could start production there in 2027, Reuters reported Monday, citing unnamed sources familiar with it.

Toyota spokesperson Ed Hellwig, in an emailed statement to Benzinga, said that the company has been weighing ways to improve its manufacturing efficiencies to best serve its customers and provide stable employment for its team members.

The company stated that it had nothing to announce at this time and planned not to comment on speculation.

Also Read: Toyota’s GR86 Yuzu Edition Brings Sleek Design, Performance Upgrades; Only 860 Units Available In North America

However, Toyota plans to maintain overall vehicle output in Canada.

The automaker manufactures the SUV’s version in Kentucky, Canada and Japan. According to the report, it originally planned to export the new RAV4 from Canada and Japan to the U.S.

Toyota will showcase a restructured 2026 RAV4 later in 2025.

The RAV4 was the best-selling vehicle in the U.S. in 2024, Reuters cites JATO Dynamics. Toyota sold over 475,000 RAV4s in the U.S. last year, accounting for ~20% of its total vehicle sales.

Toyota has 11 plants in the U.S. In the first quarter of 2025, Toyota Motor North America’s (TMNA) U.S. sales rose by 0.9% on a volume basis to 570,269 vehicles compared to last year. On a daily selling rate (DSR) basis, first-quarter sales rose 3.6%.

Electrified vehicle sales under TMNA surged by 39.6% (volume basis), representing 50.6% of the total sales volume.

Goldman Sachs projected imported vehicle prices to surge by $5,000 to $15,000, while even U.S.-built cars could see cost hikes of $3,000 to $8,000 due to foreign-made parts.

According to JPMorgan’s Akira Kishimoto, Japanese automakers could face a potential hit of 4.46 trillion yen (about $29.44 billion). Given its resilience and strong fundamentals, Toyota remains JPMorgan’s top pick.

Price Action: TM stock is down 1.51% at $173.71 at last check Monday.

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