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A 50% increase in tariffs on Canadian vehicles and parts would be devastating to the entire automobile industry, according to a senior official from Honda.
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President Donald Trump said the United States would raise tariffs on imports of cars, trucks and auto parts from Canada to 50% on Jan. 1, 2027, should the two countries not come to a new trade agreement by the end of the year.
“That really would be catastrophic for the entire industry,” Jennifer Thomas, senior vice president of corporate affairs at American Honda Motor Co., said during a Reuters automotive conference in Detroit.
Thomas said the best scenario would also include Mexico in the arrangement and reach a trilateral deal, like the Canada-United States-Mexico Agreement (CUSMA).
Automakers are paying attention to the negotiations between the nations, hoping an agreement can be reached that would satisfy the manufacturers.
The auto industry in North America is highly integrated, and with higher tariffs looming, that could potentially raise costs straight across the board. Higher tariffs could also affect where companies such as Honda build new plants.
‘Integral to our success’
“We need that trilateral agreement to stay in place in order for the U.S. industry to be competitive. It’s integral to our success,” said Thomas.
Back in August, Honda executive vice president Noriya Kaiharatold reporters in Washington that the automaker is close to full production capacity in North America and needs a new factory. However, the automaker needs to see an agreement to move forward.
“If there is no (CUSMA) agreement in the future, we may have to change our direction,” Kaihara told reporters.
The auto giant has not publicly stated where the proposed plant would be built.
“We are at capacity, and so we’re exploring all options. And at the end of the day, we’re going to continue to invest in the U.S.,” Thomas added.
According to theGlobal Automakers of Canada, Honda is the second largest producer of vehicles in Canada. In 2025, Honda built approximately400,000 vehicles in Canada.
Honda Canada can produce 400,000 vehicles annually at its two manufacturing sites in Alliston, Ont. Approximately 69% of all Honda vehicles sold in Canada are proudly built in Canada.
