Honda Warns 50% Canada Car Tariffs Could Crush the Auto Industry

Honda says doubling U.S. tariffs on Canadian cars to 50% would be 'catastrophic' if a new trade deal isn't reached by January 1.

Honda just sounded the alarm about a looming trade crisis that could shake up the entire car industry.

A top executive at Honda warned that if the United States and Canada don't agree on a new trade deal by the end of this year, the results could be "catastrophic."

Here's the key issue. President Donald Trump has threatened to double the tariffs (taxes a country charges on goods coming in from abroad) on Canadian cars and car parts — jumping from 25% to a massive 50% starting January 1 if no deal is reached.

Why does this matter so much? Cars aren't made in one place. Parts constantly cross borders between the U.S., Canada, and Mexico during production. Higher tariffs make this far more expensive, which can raise car prices and hurt automakers.

Key facts from the article:

Honda is the second-largest car producer in Canada, behind Toyota.
More than 60% of the Honda vehicles sold in the U.S. are actually built in the U.S.
Automakers want a three-country (trilateral) deal — covering the U.S., Canada, and Mexico — rather than deals between just two nations.

The existing three-country agreement is called the USMCA (United States-Mexico-Canada Agreement). It replaced an older deal called NAFTA and took effect in 2020. However, the U.S. recently decided not to automatically extend it, instead putting it under a yearly review — creating uncertainty for carmakers.

Jennifer Thomas, a senior Honda executive, said she is "cautiously optimistic" that a sensible deal will be reached. She pointed to recent signs that the U.S. and Canada have restarted trade talks, including easing taxes on materials like aluminum.

The bottom line: Honda and other automakers are urging leaders to keep a three-country trade deal in place. Without it, car production across North America could become more costly and less competitive — potentially affecting prices and jobs across the industry.

This is an AI-generated summary. Read the original article at: https://www.cnbc.com/2026/10/27/honda-warns-50percent-canada-auto-tariffs-would-be-catastrophic.html