While the factory would, in theory, be active by 2021 and aim to produce 300,000 cars per year, employing 4000 workers, what's not clear is whether there is a platform-sharing deal in place to allow Mazda's American faux-SUVs to be built on the same production line as the future Corolla.
Meanwhile, Mazda now has no production facilities in the USA, but has previously operated factories in Kansas and MI, one of the Midwestern, rustbelt states Trump promised to return to prosperity during his presidential campaign.
The new factory's location hasn't been decided.
Toyota and Mazda have agreed a business alliance that will involve the two Japanese firms working together to develop new technology, including electric vehicles (EVs).
"Today's agreement is a testament to the positive result of two years of collaborative and deliberate discussions between the two companies, and it is a milestone in the journey to further strengthen and accelerate the partnership in a sustainable way", Toyota and Mazda said in a statement.
The new plant will be responsible for building the Toyota Corolla, which was originally planned to be built at Toyota's new plant in Mexico alongside an unnamed Mazda model.
"Now we face a battle with new rivals mainly in emerging markets and also a battle with IT companies such as Apple and Google", Toyota president Akio Toyoda said at a press conference. "NO WAY! Build plant in USA or pay big border tax", Trump tweeted at the time.
Under the deal announced Friday, Toyota will take 5.05% stake in Mazda worth 50 billion yen ($454 million). Until past year, Subaru Corp. built the Camry for Toyota at a factory in Indiana.
Mazda, whose sales are an eighth that of Toyota, says it lacks the funds to develop electric cars on its own. Mazda built cars in MI in collaboration with the Ford Motor Co. but has not made cars in the United States in over a decade.
He campaigned on promises to increase manufacturing and expand employment for American auto workers. He threatened auto companies with a "big border tax" if they chose to build cars in Mexico instead of the US. "Because of its strong dependence on North American market, Mazda absolutely needs to expand its manufacturing footprint here". "The fruit of our partnership [with Mazda] is that we were able to gain a companion who loves cars". He praised Mazda as a great partner in that effort.
Toyota announced plans in January to invest $10 billion in USA operations over the next five years. Production of the mid-size pickup truck will also continue at the current sites in the USA and Mexico.