Honda warns Canada auto tariff hike risks industry disruption

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Honda warns Canada auto tariff risks

Highlights

President Donald Trump threatens to double tariffs on Canadian vehicles and parts to 50% from 25% on Jan. 1 without a new trade deal.
Honda, Canada's second-largest vehicle producer, warns cross-border supply chains could face severe disruption due to parts moving repeatedly during production.
U.S. will not automatically extend USMCA, moving to an annual review process and increasing regulatory uncertainty for North American automakers.

Trade deadline raises pressure on automakers

As reported by CNBC, citing Reuters, Honda says the industry is heading toward a damaging outcome if Washington and Ottawa fail to reach a new trade deal by the end of the year. Jennifer Thomas, senior vice president of corporate affairs at American Honda Motor Co., says a move to double tariffs on Canadian vehicles and parts would be "catastrophic for the entire industry."

President Donald Trump has threatened to raise those tariffs to 50% from 25% on Jan. 1 if the two countries do not secure an agreement. Thomas says Honda would prefer a broader arrangement that also includes Mexico, reflecting the trilateral structure of the United States-Mexico-Canada Agreement, or USMCA.

She adds that trade groups representing Honda and other major U.S. auto companies are advocating for a comprehensive North American framework rather than separate bilateral deals. Thomas also says she is cautiously optimistic that the tariff increase can still be avoided.

North American supply chains remain exposed

Honda is the second-largest vehicle producer in Canada after Toyota Motor, underscoring how much is at stake for manufacturers with cross-border operations. Industry officials continue to warn that tariff uncertainty is especially disruptive because parts move repeatedly across national borders during vehicle production.

Thomas says she never expected North America to be placed at such a disadvantage, adding that some overseas countries now face better tariff conditions. Her comments come after U.S. Trade Representative Jamieson Greer says the U.S. will not automatically extend USMCA, shifting the pact into an annual review process instead of a 16-year trilateral extension.

In our earlier report on how geopolitical conflicts and tariffs are reshaping global trade, we highlighted the WTO’s warning that companies are redesigning supply chains and shipping routes to withstand repeated shocks. The piece noted that these adjustments may outlast the conflicts themselves, as businesses accept higher costs in exchange for resilience amid ongoing uncertainty.

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