Honda Executive: 50% Tariffs Would Be Catastrophic for North American Auto Industry

The U.S. and Canada face a potential doubling of vehicle tariffs to 50 percent on January 1, a threshold Jennifer Thomas, senior vice president of corporate affairs at American Honda Motor Co., described as catastrophic for the entire automotive industry. Speaking during a Reuters automotive conference in Detroit on Tuesday, Thomas stated that the sector cannot sustain such a sharp increase in costs if the two nations fail to reach a new trade agreement by the end of the year.

President Donald Trump has threatened to raise tariffs on Canadian vehicles and parts from their current 25 percent rate to 50 percent if no deal is signed. This escalation follows his earlier announcement in August that the administration would not automatically extend the United States-Mexico-Canada Agreement, or USMCA. U.S. Trade Representative Jamieson Greer previously confirmed that the pact would move into an annual review process rather than receiving a 16-year trilateral extension.

Thomas advocated for a comprehensive agreement that includes Mexico, mirroring the structure of the USMCA which took effect in 2020. She noted that trade associations representing Honda and other major industry players have consistently pushed for this trilateral arrangement over bilateral deals. While the administration has negotiated separate accords with countries like Japan and South Korea, those agreements include 15 percent tariffs on vehicles. Thomas expressed concern that the North American region is being put at a competitive disadvantage compared to these other overseas markets.

Honda is the second-largest vehicle producer in Canada, trailing only Toyota Motor. Despite this presence, the company reports that more than 60 percent of the vehicles it sells in the United States are manufactured domestically across multiple U.S. assembly plants. The industry relies heavily on parts crossing borders for production, making tariff uncertainty a central concern for officials. Thomas indicated that recent reports of reestablished trade talks between the U.S. and Canada, including eased levies on critical materials like aluminum, provide some optimism.

"Our message has been clear: We need that trilateral agreement to stay in place in order for the U.S. industry to be competitive," Thomas said. "It's integral to our success." She added that she is cautiously optimistic that cooler heads will prevail to avoid the tariff doubling. Thomas also remarked that she never expected to see the North American region face such specific disadvantages in global trade negotiations.