America is Toyota’s largest market for its Lexus brand, but this hasn’t stopped the company from deciding to close one of its two US production plants, according to Nikkei, the world’s largest financial newspaper. Currently, Lexus produces the ES mid-size sedan in Kentucky and the TX SUV in Indiana, but the company plans to consolidate production at a single location.
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According to Nikkei, though Lexus and Toyota have yet to officially confirm the move, the report suggests Toyota's decision is a response to the tariffs imposed by the Trump administration on US imports. The new strategy will see Lexus focus on producing its high-selling hybrid vehicles at its remaining American plant in Indiana, while shifting other luxury models to Japan.
This change is not expected to affect Lexus’s operations in Canada, where the company currently manufactures the RX and NX SUVs. Lexus operates two plants in Japan - the Tahara plant in Aichi, which is five times the size of the soon-to-close Kentucky facility, produces models like the GX, IS, LS, and NX. The Motomachi site, also in Aichi, manufactures the LC, while the Kyushu facility in Fukuoka makes the UX, NX, ES, and RX.
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Third facelift for its Japanese-built IS
This week, Lexus also unveiled a third facelift for its Japanese-built IS compact sedan, which first debuted in 2013, making it one of the oldest cars still on sale. The update features a sharper front design, new 19-inch alloy wheels, and a revised interior that removes the controversial touchpad controller and CD player.
Unfortunately for Kentucky, it will lose out, and Lexus production will cease, though Toyota will continue to manufacture other vehicles there. The next-generation Lexus ES, which was unveiled a few months ago and is expected to arrive in showrooms early next year, will reportedly be produced in Japan.
A new electric power steering system and updated dampers are expected to enhance handling, though the powertrain setup is likely to remain the same. If that’s the case, the IS 300h hybrid will feature a 2.5-liter four-cylinder engine producing a modest 217 hp (162 kW / 220 PS), while the non-hybrid IS 350 will be equipped with a 3.5-liter V6 engine delivering 314 hp (214 kW / 318 PS). The latter, though less fuel-efficient, promises a more thrilling driving experience.
The US-built TX (shown below) sees a $500 price increase for 2026, starting at $57,090 for the 275 hp (279 PS) gasoline model. The four-cylinder hybrid option, offering 366 hp (371 PS), is available for an additional $2,300. The 404 hp (410 PS) V6 hybrid 500h starts at $70,610, while the flagship TX550h+ Luxury will cost $80,960.
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The tariff scenario
A recent ruling by the US Department of Commerce has extended steep tariffs to include steel and aluminium-containing products, which will have significant consequences for various industries, including automotive manufacturing. Under this rule, announced on August 19, 2025, 407 product categories were added to the existing tariff list, and imports with steel or aluminium content now face a 50 per cent duty. This move, aimed at protecting US manufacturers, is expected to drive up costs for electric-vehicle (EV) components, aftermarket exhaust systems, and other automotive parts reliant on steel and aluminium.
Also Read: US tariff expansion escalates costs for EV and aftermarket exhaust industries
Lexus & aluminium
Lexus’s reliance on aluminium in its high-performance automotive components is another layer to consider in the context of the new tariffs. Aluminium is used in critical components such as engine parts, transmission elements, wheels, and suspension towers, where its strength, durability, and lightweight properties are crucial for performance. In addition, Lexus uses aluminium in components like aerodynamic wheels and even in the paint finish of its vehicles, where aluminium flakes enhance the aesthetic appeal.
As the cost of aluminium rises due to tariffs, Lexus, along with other automakers, will need to manage the impact on vehicle production costs. This could lead to higher prices for consumers, particularly in the premium vehicle market. Despite this, Lexus remains committed to using high-performance materials, ensuring that the vehicles remain competitive in terms of strength, luxury, and performance.
Toyota Motor’s Lexus brand incorporates high-performance aluminium alloys in various premium components of its vehicles, including engine parts, transmission elements, and wheels, to ensure superior strength, durability, and a luxurious appearance. Aluminium is also utilized in components such as suspension towers, aerodynamic wheels, and even in paint finishes, where aluminium flakes are used to create shimmering, depth-enhancing silver hues.
How will this tariff impact the EV industry?
With tariffs now targeting components like EV battery housings, motor parts, and structural elements that heavily rely on imported steel and aluminium, the cost of EVs is expected to rise. This could slow the adoption of electric vehicles, undermining efforts to reduce emissions and accelerate the clean-energy transition. The cost of aftermarket exhaust systems, which depend on imported steel, is also expected to increase, affecting the broader automotive aftermarket sector.
The tariffs are likely to create supply bottlenecks as manufacturers struggle with rising input costs and potential shortages of materials. For instance, aftermarket exhaust suppliers, which depend on steel imports, will face higher costs, potentially extending the lifecycle of older vehicles rather than encouraging the renewal of fleets with more fuel-efficient models. This could complicate the US administration’s broader sustainability and emissions reduction goals.
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