Toyota and Honda may get stuck with the bill for Trump’s Canada tariffs
The United States remains Toyota and Honda’s biggest market.
US President Donald Trump has proposed a 50 percent tariff on Canadian car imports, which could have a significant impact on Japan's Toyota and Honda. The two automakers account for more than three-quarters of all cars produced in Canada, meaning they could be forced to shut down some production lines if the tariffs take effect on January 1, 2027.
While a deal could still be reached, the timing of the tariffs could not be worse, as Japanese automakers are already facing competition from low-cost Chinese electric vehicles in markets such as Southeast Asia, Europe, and Latin America. Canadian-built cars make up almost a quarter of Honda's US sales and 17 percent of Toyota's, according to Barclays analysts.
If the tariffs go into effect, Toyota and Honda may have to close some of their Canadian assembly lines and redirect vehicles to other markets. This could have a significant impact on the Canadian auto industry, which produces around 1.2 million cars a year and indirectly supports 427,000 jobs. Toyota and Honda are looking to redirect Canadian-built vehicles to other markets and find ways to make up supply for the US market, but this could prove challenging.
The proposed tariffs are the latest example of Trump's trade policies that have left the global auto industry scrambling to adapt.
Written by urgent.news from Straits Times Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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