Final answer:
Toyota faced economic risks associated with local-content laws when constructing manufacturing plants in the U.S., requiring them to source 50 percent of their parts domestically.
Step-by-step explanation:
When Toyota Motor Company built automobile manufacturing plants in Tennessee and Ohio, it faced economic risks associated with local-content laws. These requirements dictate that a certain percentage of the automobile's components must be manufactured domestically. Due to the stipulation that 50 percent of all parts used in automobiles constructed in the United States must be manufactured in the United States, Toyota had to ensure compliance with these regulations, which could influence its supply chain strategies and costs. Local-content laws were likely to impact Toyota's economic risks since they might require Toyota to source materials domestically even if it is more cost-effective to source them internationally. This could be more expensive due to possible higher local manufacturing costs or the need to establish new relationships with US-based suppliers. Since the automotive industry is tightly integrated into international trade, these laws also impact how companies like Toyota operate within the global market.