Toyota is reevaluating its production strategy for the RAV4, the best-selling vehicle in the U.S., amid the economic impact of newly imposed import tariffs. According to a Reuters report citing unnamed sources, the automaker may now build the upcoming model in Kentucky to reduce exposure to the 25% tariff on imported vehicles enacted earlier in April under President Donald Trump’s trade policy.
Currently, RAV4s are assembled in Kentucky, Canada and Japan. However, Toyota had planned to halt U.S. production of the next model in favor of sourcing entirely from Canada and Japan. That plan is now under review, with Kentucky once again being considered for production, though any shift would require significant investment and time.
"Retooling facilities and tweaking supply chains" would be "time-consuming and capital-intensive," Reuters reported, citing sources familiar with the matter. If approved, domestic production of the next-generation RAV4 would not begin until 2027.
In 2024, the RAV4 outpaced all competitors in U.S. sales, including the Ford F-150, with more than 475,000 units sold.
The scope of any future U.S.-based production remains unclear, including what proportion of RAV4 units would be manufactured domestically. Toyota currently operates 11 manufacturing plants in the U.S., which collectively produce about half of the 2.3 million vehicles the company sold domestically last year.
Amid mounting industry pressure, Trump hinted that automakers may receive some leniency regarding the tariffs. “I’m looking at something to help some of the car companies with it,” he said, according to AP News. “They need a little bit of time because they’re going to make them here, but they need a little bit of time.”
