Honda Motor warned that proposed 50% tariffs on Canadian vehicles and parts would be catastrophic for the automotive industry, according to Jennifer Thomas, senior vice president of corporate affairs at American Honda Motor Co. Thomas made the statement during a Reuters automotive conference in Detroit on Tuesday, referencing President Donald Trump's threat to double tariffs from 25% to 50% on Jan. 1 if the U.S. and Canada fail to reach a new trade deal. The warning comes months after U.S. Trade Representative Jamieson Greer moved the United States-Mexico-Canada Agreement into an annual review process instead of a 16-year trilateral extension, creating uncertainty for automakers with cross-border production operations.
Honda Produces Over 60% of US Sales Domestically Across Multiple Plants
Honda reports that more than 60% of the vehicles it sells in the U.S. are manufactured domestically across multiple U.S. assembly plants, despite establishing large operations in Canada. The company is the second largest producer of vehicles in Canada behind Toyota Motor. Thomas stated that the lack of a North American trade deal and tariff uncertainty affect the number of parts that regularly cross borders for vehicle production.
Industry Advocates Push for Trilateral USMCA Deal Including Mexico
Thomas said Honda ideally wants the countries to include Mexico in any arrangement and reach a trilateral deal like USMCA. Trade associations representing Honda and every major player in the U.S. automotive industry have been advocating for that more comprehensive accord and against bilateral arrangements between two countries. "Our message has been clear: We need that trilateral agreement to stay in place in order for the U.S. industry to be competitive," Thomas said. "It's integral to our success."
USMCA Entered Annual Review Process Under Greer Announcement
U.S. Trade Representative Jamieson Greer announced that the U.S. would not automatically extend USMCA, moving the trade pact into an annual review process instead of a 16-year trilateral extension. Trump negotiated USMCA to replace the North American Free Trade Agreement during his first term and it took effect in 2020. He later accused Canada of "ripping off the United States of America for years." The Trump administration has negotiated trade deals with other countries such as Japan and South Korea that include 15% tariffs on vehicles.
FAQ
What did Honda warn about the proposed Canada auto tariffs?
Honda Motor warned through senior vice president Jennifer Thomas that 50% tariffs on Canadian vehicles and parts would be catastrophic for the entire automotive industry. Thomas made this statement during a Reuters automotive conference in Detroit on Tuesday.
Why is Honda concerned about the US-Canada trade deal deadline?
President Donald Trump threatened to double tariffs on Canadian vehicles and parts from 25% to 50% on Jan. 1 if the U.S. and Canada don't reach a new trade deal. Honda is the second largest vehicle producer in Canada and relies on cross-border parts movement for production operations.
How much of Honda's US sales are manufactured domestically?
Honda reports that more than 60% of the vehicles it sells in the U.S. are manufactured domestically across multiple U.S. assembly plants, despite the company having established large operations in Canada.
