A senior Honda executive cautioned that the automotive industry faces severe consequences if the United States and Canada fail to negotiate a new trade agreement before the end of this year. President Trump has threatened to escalate tariffs on Canadian vehicles and parts from 25% to 50% starting January 1 if no deal materializes.
Jennifer Thomas, senior vice president of corporate affairs at American Honda Motor Co., expressed concern during a Reuters automotive conference in Detroit that such tariff increases would prove devastating for the entire sector. She emphasized that the preferred outcome would involve Mexico in the arrangement, creating a trilateral agreement similar to the existing United States-Mexico-Canada Agreement, or USMCA. Major automotive trade associations and leading U.S. industry players have advocated for this comprehensive approach rather than bilateral arrangements between individual nations.
Thomas indicated cautious optimism that negotiations will ultimately prevent the tariff doubling, which was initially threatened in August. She noted encouragement from recent reports indicating that U.S. and Canadian officials have resumed trade discussions, with progress on tariff reductions for critical materials including aluminum. The current uncertainty stems from Trump administration decisions to end the automatic extension of the USMCA and instead subject it to annual review rather than the original 16-year trilateral extension.
Honda operates as Canada’s second-largest vehicle producer after Toyota, and the company relies heavily on cross-border parts movement for production efficiency. The automaker reports manufacturing more than 60% of vehicles sold in the U.S. at domestic assembly plants. Thomas highlighted concerns that North America faces competitive disadvantages compared to other regions, noting that the Trump administration has negotiated deals with Japan and South Korea featuring 15% vehicle tariffs—substantially lower than the threatened Canadian rates.
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