Honda warns of consequences of 50% US tariffs on cars from Canada — CNBC

Jennifer Thomas, senior vice president of corporate affairs at American Honda Motor, said in Detroit, United States, that a possible increase in US tariffs on automobiles and auto parts from Canada to 50% would be catastrophic for the entire automotive industry. US President Donald Trump had threatened to raise the rate from 25% to 50% starting January 1 if Washington and Ottawa do not conclude a new trade agreement.

Call to preserve the trilateral agreement

Thomas supported an agreement involving the United States, Canada and Mexico, similar to the United States-Mexico-Canada Agreement (USMCA). According to her, trade associations representing Honda and other key participants in the US automotive industry support preserving a comprehensive trilateral format and oppose bilateral agreements.

As CNBC reports, US Trade Representative Jamieson Greer previously said that Washington would not automatically extend the USMCA. According to him, the agreement will undergo an annual review instead of a 16-year trilateral extension. The USMCA, which replaced the North American Free Trade Agreement, entered into force in 2020.

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Production dependence on cross-border supplies

Honda ranks second in vehicle production in Canada after Toyota. Automotive industry representatives have expressed concern over uncertainty regarding tariffs, as parts used in vehicle production regularly cross North American borders.

Thomas said she was cautiously optimistic about the chances of avoiding a doubling of tariffs. She referred to reports of resumed trade negotiations between the United States and Canada, including on easing tariffs on critical materials such as aluminum. According to Honda, more than 60% of the vehicles the company sells in the United States are produced at US assembly plants.

She also noted that the United States has concluded trade agreements with Japan and South Korea that provide for 15% tariffs on automobiles. These countries are major exporters of vehicles to the US market.