Trump Proposes Slapping 50% Tariff on Canadian Auto Imports

U.S. President Trump has proposed raising the tariff on automobiles imported from Canada from the current 25% to 50%, effective January 1 next year. According to Barclays analysis, Toyota and Honda account for more than three-quarters of Canada’s total vehicle production and would be the most affected among major automakers. In 2023, Canadian-made vehicles represented nearly 25% of Honda’s U.S. sales and 17% of Toyota’s U.S. sales. Canada’s auto industry produces approximately 1.2 million vehicles annually and indirectly supports around 427,000 jobs. Toyota’s main export model to the U.S. is the RAV4, while Honda’s is the CR-V. The previous 25% tariff has already cost Toyota roughly ¥1.4 trillion (about $8.8 billion), prompting the company to announce plans to invest up to $10 billion in the U.S. over the next five years. Honda stated it will not build an eighth North American assembly plant unless negotiations under the U.S.-Mexico-Canada Agreement (USMCA) are extended. Hyundai has also delayed investment decisions due to uncertainty surrounding the USMCA. On July 1, 2024, Trump decided not to renew the six-year-old USMCA, opting instead for annual reviews; related negotiations are still ongoing. Two Japanese suppliers said the uncertainty over whether the new tariffs will take effect makes it difficult to formulate contingency plans.