Honda is warning that a 50% U.S. tariff on Canadian vehicles and parts could be “catastrophic” as both countries reportedly resume negotiations amid lingering concerns among those involved in the talks.
The details: Jennifer Thomas, senior vice president of corporate affairs at American Honda Motor Co., raised the concerns during a Reuters automotive conference in Detroit, according to CNBC, as the deadline for the higher tariffs approaches.
President Trump’s plan to double the current 25% tariff on Canadian vehicles and parts is set to take effect Jan. 1, 2027, unless the two countries reach a deal.
Honda has significant operations in Canada, though more than 60% of the vehicles it sells in the U.S. are manufactured domestically across multiple states, said the automaker.
What they’re saying: “That really would be catastrophic for the entire industry,” Thomas said, adding that she is “cautiously optimistic” that a U.S.-Canada deal will be reached before January, while calling for a trilateral agreement with Mexico, per CNBC.
A 50% tariff on Canadian vehicles and parts could significantly increase costs for automakers with cross-border operations and potentially put greater pressure on vehicle pricing, affordability, and parts availability for U.S. dealers.
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Between the lines: Thomas’ optimism about a U.S.-Canada trade deal follows reported progress in negotiations, though significant uncertainty remains over whether the two countries can reach an agreement.
Canadian Prime Minister Mark Carney said, “To the extent any progress has been made, it's because the US is coming closer to our position,” signaling that Canada intends to remain firm in its negotiating demands.
Commerce Secretary Howard Lutnick, who has been leading talks with Canadian Trade Minister Dominic LeBlanc, has maintained a firm position on sector-specific tariffs.
The final decision on whether the U.S. reaches a deal before January 1 will likely rest with President Trump, whose negotiating approach has been tough and unpredictable.
What they’re saying: “Any potential Canada deal is going to have the same issue,” an industry official granted anonymity to discuss private conversations, told Politico. “And that is Lutnick’s strong reluctance to negotiate on the [sector-specific tariffs], particularly now that he is much heavier involved.”
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