Companies
Honda warns 50% Canada auto tariffs will cripple industry
Honda says a jump to 50% tariffs on Canadian vehicles would be catastrophic if a new North American trade deal isn’t reached by year‑end.
Listen to this story
Honda officials told Reuters in Detroit that a potential increase to 50% tariffs on Canadian‑made vehicles and parts would be "catastrophic for the entire industry," according to reporting by CNBC. The warning comes as President Donald Trump has signaled he will lift the current 25% levy to 50% on Jan. 1 if the United States and Canada fail to lock in a new trade framework before the end of the year.
Trump’s threat follows U.S. Trade Representative Jamieson Greer’s announcement that the United States‑Mexico‑Canada Agreement (USMCA) will not be automatically renewed, pushing the pact into an annual review rather than a 16‑year extension. The original USMCA, negotiated by Trump to replace NAFTA in 2020, has become a focal point for industry leaders seeking certainty.
Jennifer Thomas, senior vice‑president of corporate affairs for American Honda Motor Co., said the ideal outcome would be a trilateral arrangement mirroring the USMCA that includes Mexico. Trade groups representing Honda and other automakers have been lobbying for such a comprehensive deal and warning against any bilateral shortcuts between the U.S. and Canada.
Honda is the second‑largest vehicle producer in Canada, trailing only Toyota, yet more than 60% of the cars it sells in the United States are built at its U.S. assembly plants. The company highlighted how deeply intertwined North American supply chains are, with countless parts crossing the border daily for final vehicle assembly.
Industry voices note that the uncertainty surrounding tariffs jeopardizes competitiveness, especially given that the United States already enjoys 15% tariffs on imports from major vehicle exporters like Japan and South Korea. Honda‑aligned associations argue that a stable trilateral pact is essential to keep the region’s auto sector viable.
Thomas expressed cautious optimism that “cooler heads will prevail,” pointing to recent reports of renewed U.S.–Canada trade talks and the easing of duties on critical inputs such as aluminum.
Why it matters: A 50% tariff could cripple North American auto production, and Honda’s warning underscores the broader industry’s reliance on a stable US‑Canada‑Mexico trade framework.
Source: Honda warns 50% Canada auto tariffs would be catastrophic for auto industry — CNBC