Honda News & Analysis

Honda Warns 50% Canada Auto Tariffs Threaten Industry by 2025

Honda Motor warned that a potential increase in U.S. tariffs on Canadian vehicles and parts from 25% to 50% would be disastrous for the automotive industry. The warning came as U.S. President Donald Trump threatened to double these tariffs starting January 1, 2025 if the U.S. and Canada fail to reach a new trade deal. Jennifer Thomas, senior vice president at American Honda Motor Co., called the scenario "catastrophic" for the entire industry. Honda advocates for a trilateral trade agreement including the U.S., Canada, and Mexico, similar to the existing USMCA deal. However, the U.S. has moved USMCA into an annual review process rather than extending it for 16 years. Honda is the second largest car producer in Canada and produces over 60% of its U.S. vehicle sales domestically, but the company said many parts cross borders regularly, making tariff uncertainty a major concern. The article highlights that although trade talks have resumed and some levies such as on aluminum are easing, Honda and other industry groups emphasize the need to maintain a trilateral agreement for competitiveness. This situation could raise vehicle production costs and disrupt supply chains. The 50% tariff threat matters to investors as increased costs and trade uncertainty could impact automaker revenues and profitability.