Honda executive calls 50% Canadian tariffs catastrophic for auto industry

Jennifer Thomas, senior vice president of corporate affairs at American Honda Motor Co., described a potential 50% tariff on Canadian automobiles as catastrophic for the sector. She made the assessment during a Reuters automotive conference in Detroit on Tuesday.

President Donald Trump has stated that tariffs on Canadian vehicles and parts will rise from 25% to 50% on January 1 if a new trade agreement is not reached. Thomas noted that the industry currently faces uncertainty because the U.S. Trade Representative, Jamieson Greer, decided not to automatically extend the United States-Mexico-Canada Agreement. The pact, which took effect in 2020, is now subject to an annual review process rather than a 16-year trilateral extension.

Thomas urged for a trilateral deal involving Mexico, aligning with the position of major trade associations. She argued that bilateral arrangements are insufficient for maintaining U.S. competitiveness. Her comments reflect a broader industry push to retain the framework of the USMCA, which Trump negotiated to replace the North American Free Trade Agreement during his first term.

The executive expressed cautious optimism that the tariff doubling might be avoided. She cited recent reports of reestablished trade talks between the U.S. and Canada as a positive sign. These discussions have included easing levies on critical materials like aluminum. Thomas emphasized that the trilateral agreement is integral to the success of the U.S. automotive industry.

Honda is the second-largest vehicle producer in Canada, trailing only Toyota Motor. The company maintains substantial operations in the country, though more than 60% of the vehicles it sells in the U.S. are manufactured domestically at multiple assembly plants. Parts frequently cross North American borders during production, making tariff rates a critical factor in cost structures.

Thomas stated that she did not expect the North American region to be placed at a disadvantage compared to other markets. She noted that the Trump administration has negotiated trade deals with countries like Japan and South Korea. Those agreements include 15% tariffs on vehicles, a rate lower than the proposed 50% duty for Canadian imports.