Before every election, executives review the politics and determine which one would make life easier for the company. Individuals may look at the parties and determine what is in their self interest? what is best for the country? if they both align so much the better. For executives, it is what is best for the company to make profits? hopefully for most companies while there are advantages and disadvantages for both, the companies can work with either party.

In an article by River Akira Davis of the New York Times News Service, before the election, Toyota thought a second Trump administration would be good for them. President Trump campaigned on dismantling policies that shifted autos from fossil fuels to electric, Toyota liked that and donated $1 million to the Trump inauguration in January. There was hope among the dealers and executives of Toyota.

Then the Trump administration put on 25% tariffs.

Japan is one of the world’s largest automobile exporters and the US is the biggest market for companies such as Toyota, Honda, Nissan, Mazda and Subaru. The tariffs could easily wipe out 40% of Japanese growth this year.

While other vehicle makers were coming out with electric vehicles, Toyota stayed with hybrid ones.

Japan made about 1 million of the 2.3 million cars it sold in the US outside of the country.

Over the past 70 years, Toyota has invested $50 billion in the US and employes 49,000 people.

Most Japanese automakers do not have excess production capacity in the US which means they would have to build. Unfortunately, it takes about 4 years to design, build and equip a new factory. The allocation of capital requires a solid business case, and according to Michael Robinet of the S&P Global Mobility, right now they do not have it.

Linking to dividend paying stocks, everyone has self-interest when investing. For dividend investing, your expectation is business conditions do not change that much or reasonable status quo. Change happens, but you expect because the companies make profits, they have the resources to deal with it. Sometimes, governments make decisions which throw out the business plans, how will the company and politicians adapt? How do you adapt?

There are more questions than answers, till the next time – to raising questions.