President Masamichi Kogai shake hands after a press conference in Tokyo Friday, Aug. 4, 2017.
The final location has not yet been picked but both auto manufacturers hope the plant will build 300,000 vehicles annually and employ 4,000 workers.
The Japanese automakers, which have not announced exactly where the new factory would be built, would reportedly share the new facility equally. Money reported the plant is expected to be operational by 2021.
Toyota had meant to move Corolla production to a new plant in Mexico from the current site in Canada.
Representing Mazda, president and chief executive Masamichi Kogai said: "Nothing would please me more than if, through this alliance, we can help to energise the auto industry and create more vehicle fans by bringing together two competitive spirits to spur each other on, leading to innovations and fostering talent and leaders". Toyoda denied that Trump's views influenced his decision.
The biggest news is the announcement of a new joint manufacturing plant in the United States, with the aim to start production there in 2021. But at Toyota Motor Sales U.S.A., which covers sales of both the Toyota and Lexus brands, cars accounted for 44 percent of the mix. Corolla sales fell 10 percent through July.
Nevertheless, in its earning report, published on Friday, Toyota said it expected profit for the year to March 2018 to come in at 1.75 trillion yen, up from an earlier 1.5 trillion yen forecast. If not, the plant will have the flexibility to shift to another model, according to spokesman Scott Vazin.
Toyota will take 5 per cent shares of Mazda while the latter will take 0.25 per cent share from Toyota for the tie-up. Both automakers are behind rivals in the race for affordable, mass-produced electric cars.
With the Prius and other hybrids, Toyota has dominated the market for lower-emissions vehicles for years.
Toyota noted the growing competition from newcomers in the auto industry like Google, Apple and Amazon, stressing he was anxious about autos turning into commodities. The two Japanese automakers, which had been contemplating a possible business alliance, judged it necessary to strengthen their partnership.
Toyota's Mexico plant will produce its Tacoma truck instead.
The union has struggled to expand beyond its stronghold at Detroit automakers to foreign-owned plants, especially in the southern US.
"Given the massive level of competition in the industry, partnerships are no longer a surprise", said Akshay Anand, an executive analyst at Kelley Blue Book. Mazda was owned by Ford Motor and Suzuki by General Motors for decades, but their American partners withdrew under financial pressure after the 2008 financial crisis.