Honda warns 50% Canada auto tariffs would be catastrophic for auto industry
President Donald Trump has threatened to double tariffs on Canadian vehicles and parts from 25% to 50% if a trade deal is not reached between the two countries.
Key points
- Honda executive Jennifer Thomas warned that 50% U.S. tariffs on Canadian vehicles would be catastrophic for the auto industry.
- Trump has threatened to double tariffs from 25% to 50% on Jan. 1 if the U.S. and Canada do not reach a trade deal.
- Honda and other automakers want a trilateral USMCA deal including Mexico rather than bilateral arrangements.
A Honda executive warned Tuesday that the automotive industry faces a catastrophic scenario if the U.S. and Canada cannot reach a new trade deal by the end of this year. President Donald Trump has threatened to double tariffs on Canadian vehicles and parts from 25% to 50% on Jan. 1 if no deal is reached.
Jennifer Thomas, senior vice president of corporate affairs at American Honda Motor Co., made the comments during a Reuters automotive conference in Detroit. She said the tariff increase would be devastating for the entire industry.
Call for trilateral agreement
Thomas said the ideal outcome would include Mexico in a trilateral deal like the United States-Mexico-Canada Agreement, or USMCA. Trade associations representing Honda and every major player in the U.S. automotive industry have advocated for that comprehensive accord and against bilateral arrangements between two countries.
She said she is cautiously optimistic that cooler heads will prevail to avoid the doubling of tariffs, which Trump threatened in August. She cited recent reports that the U.S. and Canada have reestablished trade talks, including easing levies on critical materials such as aluminum.
That really would be catastrophic for the entire industry
— Jennifer Thomas, senior vice president of corporate affairs at American Honda Motor Co.
Honda's Canada operations
Honda is the second-largest producer of vehicles in Canada behind Toyota Motor. Many automotive officials have voiced concerns about the lack of a North American trade deal and tariff uncertainty due to the number of parts that regularly cross borders for vehicle production.
Honda reports that more than 60% of the vehicles it sells in the U.S. are manufactured domestically across multiple U.S. assembly plants. The Trump administration has negotiated trade deals with countries such as Japan and South Korea that include 15% tariffs on vehicles.
