Trump’s New Canada Tariff May Hit Honda & Toyota the Hardest

US President Donald Trump is planning to target Ottawa and impose a 50% tariff on Canadian car imports. These tariffs will primarily target the two Japanese automakers, Toyota and Honda, as both companies account for more than three-quarters of all the cars made in Canada. Analysts say they could be forced to shut down a few production lines if the tariff is imposed by January 1.

Last year, Canadian-built cars accounted for almost a quarter of Honda’s US sales and 17% of Toyota’s, making it the biggest market for both manufacturers. These numbers are the highest among the major automakers, according to Barclays Analysts. As a result, the two automakers could face their biggest potential hit if the current 25% tariff is doubled.

Canada’s auto industry produces around 1.2 billion cars a year and indirectly supports 427,000 jobs. Exports from Canada to the United States include the Toyota RAV4 and the Honda CR-V, which are among the best-selling SUVs in the United States.

Looking at the policy, Julie Boote commented, "If you really wanted ​to destroy the Canadian auto industry, you could with these tariffs." Both companies would likely have to close some of their Canadian assembly lines, she added.

The timing could not get any worse, as Japanese automakers are facing big losses due to low-cost Chinese EVs in markets like Southeast Asia, Europe and Latin America.

Recently, Trump’s Trade Policies have left a global impact on auto industries, leaving them scrambling to adapt. The policy would mean Toyota is doubling its U.S. production, and for Honda, which is already struggling with a money-losing business, tariffs have only added strain.

Both Toyota and Honda declined to comment.

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