Honda Executive Warns Proposed 50% Tariff on Canadian Imports Would Devastate Auto Sector

DETROIT — Failure to secure a new trade pact between the United States and Canada before the end of the year could trigger devastating fallout across the North American automotive sector, a senior executive at Honda Motor cautioned Tuesday.

The warning follows threats from President Donald Trump to double levies on imported Canadian automobiles and components from 25% to 50% starting Jan. 1 if bilateral negotiators fail to strike a deal.

“That really would be catastrophic for the entire industry,” said Jennifer Thomas, senior vice president of corporate affairs at American Honda Motor Co., during a Reuters automotive conference in Detroit.

Thomas urged negotiators to preserve a broader regional approach rather than relying on two-nation agreements. Trade groups representing Honda and every major U.S. Automaker continue to lobby for a full trilateral pact that includes Mexico, modeled on the United States-Mexico-Canada Agreement (USMCA).

Regional Supply Chains at Risk

Uncertainty over regional trade policy has deepened since U.S. Trade Representative Jamieson Greer announced that Washington would forego an automatic 16-year extension of the USMCA. Instead, the administration moved the agreement into an annual review framework.

Trump originally brokered the USMCA during his first presidential term to replace the North American Free Trade Agreement, with the replacement pact going into effect in 2020. However, the president later criticized the arrangement, accusing Canada of “ripping off the United States of America for years.”

Despite the tense rhetoric, Thomas noted that she remains “cautiously optimistic” that negotiators will avoid the doubled tariffs that Trump first threatened in August. She cited encouraging signs from resumed trade discussions between Washington and Ottawa, which have included talks on reducing levies on raw materials like aluminum.

“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.”

Manufacturing Disadvantages

Cross-border supply chains make the sector particularly vulnerable to trade friction, as parts frequently cross North American borders multiple times during vehicle production. Honda stands as Canada’s second-largest vehicle manufacturer behind Toyota Motor, though it maintains a massive domestic footprint in the United States.

According to company data, domestic assembly plants produce more than 60% of the vehicles Honda sells to American consumers. Even so, Thomas expressed dismay that North American production hubs now face higher tariff barriers than some foreign competitors.

“I never thought I would see the North American region be put at a disadvantage like this,” Thomas said.

By comparison, recent trade arrangements negotiated by the Trump administration with major car-exporting nations, including Japan and South Korea, established lower 15% tariffs on imported vehicles.